Business Segments - As of June 30, 2025, Republic Bancorp operates five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS[236]. - The Traditional Banking segment includes 47 full-service banking centers located primarily in Kentucky, with significant reliance on net interest income from investment securities and loans[240][241]. - Management has integrated mortgage banking results into the Traditional Banking segment due to its immateriality as a separate reportable segment[238]. - The Bank focuses on C&I lending, CRE, and multi-family lending, with targeted C&I credit sizes typically between $1 million and $10 million, and higher targets between $10 million and $35 million for Corporate Banking[255]. - The CRE Banking group, launched in 2022, targets large CRE projects typically ranging from $5 million to $25 million, focusing on established borrowers with low credit risk[256]. - The Business Banking group targets small businesses with annual revenues up to $10 million, offering loans between $350,000 and $1 million for various financing needs[258]. - The Bank is an SBA Preferred Lending Partner, allowing it to expedite the underwriting and approval of SBA loans, generally up to $3 million under the SBA "7A Program"[259]. Financial Performance - Total Company net income for Q2 2025 was $31.5 million, an increase of $6.3 million, or 25%, compared to Q2 2024[301]. - Diluted EPS increased to $1.61 for Q2 2025 from $1.30 in Q2 2024[301]. - Net interest income rose by $6.5 million, or 13%, from Q2 2024 to Q2 2025[304]. - Noninterest income decreased by $1.2 million, or 30%, from Q2 2024 to Q2 2025[310]. - Total Company net interest income increased by $7.7 million, or 11%, to $76.2 million in Q2 2025 from $68.5 million in Q2 2024[315]. - The Total Company net interest margin (NIM) rose by 25 basis points to 4.61% in Q2 2025 compared to 4.36% in Q2 2024[315]. - Total Company net income for the first six months of 2025 was $78.8 million, a $22.9 million, or 41% increase from the same period in 2024, with diluted EPS rising to $4.03 from $2.87[367]. - Net interest income for the Company was $178.9 million during the first six months of 2025, representing an increase of $13.4 million, or 8%, from the first six months of 2024[377]. Credit Losses and Provisions - The Bank's ACLL for expected credit losses is evaluated monthly, with significant reliance on historical loss rates and economic forecasts[230][231]. - The Company utilizes the U.S. national unemployment rate as a primary forecasting tool for its ACLL model, reflecting current economic conditions[232]. - The total company provision was a net charge of $1.8 million for Q2 2025, a decrease from $5.1 million in Q2 2024[337]. - The Traditional Banking segment's provision was a net charge of $517,000 in Q2 2025, down from $915,000 in Q2 2024, reflecting a change in loan mix[338]. - The Tax Refund Solutions segment recorded a net credit to the provision of $3.9 million in Q2 2025, up from $1.2 million in Q2 2024, primarily related to its RA and ERAs products[343]. - The ACLL (Allowance for Credit Losses) at the end of the period was $81.76 million, compared to $80.69 million at the end of Q2 2024[355]. - The company's ACLL to total loans ratio was 1.52% as of June 30, 2025, compared to 1.53% as of June 30, 2024[355]. - The total Provision for the first six months of 2025 was $19.5 million, compared to $35.8 million for the same period in 2024[416]. Tax Refund Solutions - The Tax Refund Solutions segment generates most of its business in the first half of the year, with limited revenue in the second half as it prepares for the next tax season[272]. - The RA product allows taxpayers to borrow funds as an advance of their tax refund, with maximum advance amounts of $6,500 for the 2024 Tax Season and $6,250 for the 2025 Tax Season[277]. - The ERA loan product, introduced in December 2022, allows advances up to $1,000 for the 2024 Tax Season and $2,000 for the 2025 Tax Season, with no recourse to the taxpayer if the refund is insufficient[278]. - Noninterest income for the Tax Refund Solutions segment decreased from $3.9 million in Q2 2024 to $2.7 million in Q2 2025, driven by a 17% decline in the number of tax refunds funded[363]. - Tax Refund Solutions segment net interest income decreased by $1.9 million, or 6%, due to an 8% decline in tax season origination volume[383]. - The incurred loss rate for TRS related to unguaranteed loans for the first quarter 2025 tax filing season was 2.81% of the $801 million total originations[410]. - Total ERA/RA volume for the 2025 tax filing season was $801 million, an 8% decline from $874 million in the 2024 tax filing season[409]. Asset and Liability Management - The Bank's interest-bearing liabilities primarily consist of interest-bearing deposit accounts and short-term and long-term borrowings, with FHLB advances serving as a significant liquidity source[241][243]. - Average interest-earning cash increased to $623 million with a yield of 4.45% in Q2 2025, compared to $393 million and 5.46% in Q2 2024[316]. - Average committed Warehouse lines of credit increased to $995 million in Q2 2025 from $940 million in Q2 2024[310]. - Average committed Warehouse lines of credit increased to $981 million for the first six months of 2025 from $935 million for the same period in 2024[370]. - Outstanding Warehouse period-end balances increased by $121 million in the first six months of 2025, compared to an increase of $209 million in the same period of 2024[403].

Financial Position - Total assets as of June 30, 2025, were $6,970,917, a decrease of 1.5% from $7,075,555 on March 31, 2025[4] - Total assets increased to $7,062,031,000 in Q2 2025 from $6,706,884,000 in Q2 2024, marking an increase of 5.3%[10] - Period-end assets as of June 30, 2025, totaled $6,970,917,000, an increase from $6,616,574,000 as of June 30, 2024, representing a growth of 5.4%[22] - Total liabilities decreased to $5,910,811 as of June 30, 2025, down 2.2% from $6,041,466 on March 31, 2025[4] - Total stockholders' equity increased to $1,060,106 as of June 30, 2025, up 2.9% from $1,034,089 on March 31, 2025[4] - Total stockholders' equity increased to $1.060 billion as of June 30, 2025, up from $1.034 billion at the end of Q1 2025[28] Loans and Credit Quality - Loans increased to $5,373,020 as of June 30, 2025, up 1.6% from $5,289,793 on March 31, 2025[4] - The average balance of loans, including loans held for sale, was $5,318,666 for the three months ended June 30, 2025[6] - Total Core Banking loans rose to $5,253,925 in Q2 2025 from $5,135,861 in Q1 2025, an increase of 2.3%[12] - Total nonperforming loans as of June 30, 2025, were $21,642, a decrease from $22,850 as of March 31, 2025, representing a reduction of approximately 5.3%[14] - The allowance for credit losses on loans was $81,760 as of June 30, 2025, compared to $106,303 on March 31, 2025, reflecting a reduction of 23.1%[4] - The allowance for credit losses to total loans ratio was 1.52% as of June 30, 2025, down from 2.01% as of March 31, 2025[14] - Provision for credit losses in Q2 2025 was $1,823,000, significantly lower than $5,143,000 in Q2 2024, indicating improved credit quality[10] - The annualized net charge-offs (NCOs) to average loans ratio was 1.99% for the second quarter of 2025, significantly up from 0.24% in the previous quarter[14] Income and Revenue - Total interest income for Q2 2025 was $102,203,000, an increase from $97,700,000 in Q2 2024, representing a 4.9% year-over-year growth[10] - Net interest income for Q2 2025 reached $76,202,000, compared to $68,536,000 in Q2 2024, reflecting an increase of 11.2%[10] - Noninterest income totaled $17,644,000 in Q2 2025, down from $18,346,000 in Q2 2024, a decrease of 3.8%[10] - Net income for Q2 2025 was $31,484,000, up from $25,206,000 in Q2 2024, representing a 25% increase[10] - Net income for the six months ended June 30, 2025, was $78,752,000, compared to $25,206,000 for the same period in 2024, indicating a significant increase of 212.5%[22] Efficiency and Ratios - The efficiency ratio increased to 55.0% in Q2 2025 from 40.3% in Q1 2025, showing a deterioration of 36.4%[11] - The net interest margin improved to 4.61% in Q2 2025 from 4.36% in Q2 2024[10] - The net interest margin for the total company was 4.61% in Q2 2025, down from 6.28% in Q1 2025, a decrease of 26.7%[11] - Basic EPS for Class A Common Stock decreased to $1.62 in Q2 2025 from $2.43 in Q1 2025, representing a decline of 33.4%[11] Segment Performance - The Republic Processing Group segments, including Tax Refund Solutions, Republic Payment Solutions, and Republic Credit Solutions, primarily drive net revenue through net interest income and program fees[16] - The Core Banking segments, Traditional Banking and Warehouse Lending, are primarily driven by net interest income[16] - As of June 30, 2025, the company had a total of 5 reportable segments, with Core Banking operations considered as Traditional Banking and Warehouse Lending[16] - The company reported a net-revenue concentration of 100% across its segments for Q2 2025, with core banking contributing 75%[20] Other Financial Metrics - The cost of average deposits was 1.62% in Q2 2025, slightly up from 1.57% in Q1 2025[11] - The tangible book value per share rose to $51.78 as of June 30, 2025, compared to $50.46 at the end of Q1 2025[28] - The company reported a net gain on the sale of mortgage loans of $1.483 million in Q2 2025, slightly up from $1.411 million in Q1 2025[27] - The company originated $51.788 million in mortgage loans and $321.127 million in consumer loans during Q2 2025, showing strong loan origination activity[27] - Total loan fees for the company reached $14.195 million in Q2 2025, compared to $47.513 million in Q1 2025, reflecting a significant decrease[25]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This section details the unaudited financial statements and related notes for Republic Bancorp, Inc. [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements of Republic Bancorp, Inc. and its subsidiaries for the period ended March 31, 2025, including balance sheets, income statements, comprehensive income statements, stockholders' equity statements, and cash flow statements. It also includes detailed notes on accounting policies, investment securities, loans, deposits, off-balance sheet risks, fair value measurements, mortgage banking activities, interest rate swaps, earnings per share, other comprehensive income, revenue from contracts with customers, segment information, and low-income housing tax credit investments. [Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) | ASSETS (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $793,020 | $432,151 | | Available-for-sale debt securities, at fair value | $609,327 | $584,155 | | Held-to-maturity debt securities | $5,612 | $10,778 | | Loans, net | $5,183,490 | $5,347,488 | | TOTAL ASSETS | $7,075,555 | $6,846,667 | | LIABILITIES (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Total deposits | $5,405,892 | $5,210,546 | | Securities sold under agreements to repurchase and other short-term borrowings | $89,718 | $103,318 | | Federal Home Loan Bank advances | $370,000 | $395,000 | | Total liabilities | $6,041,466 | $5,854,638 | | STOCKHOLDERS' EQUITY (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Total stockholders' equity | $1,034,089 | $992,029 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $7,075,555 | $6,846,667 | [Consolidated Statements of Income (Unaudited)](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(UNAUDITED)) | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total interest income | $129,838 | $130,632 | | Total interest expense | $27,150 | $33,713 | | NET INTEREST INCOME | $102,688 | $96,919 | | Provision for expected credit loss expense | $17,672 | $30,622 | | NET INTEREST INCOME AFTER PROVISION | $85,016 | $66,297 | | Total noninterest income | $33,154 | $23,373 | | Total noninterest expense | $58,208 | $50,971 | | INCOME BEFORE INCOME TAX EXPENSE | $59,962 | $38,699 | | INCOME TAX EXPENSE | $12,694 | $8,093 | | NET INCOME | $47,268 | $30,606 | | BASIC EARNINGS PER SHARE: Class A Common Stock | $2.43 | $1.59 | | DILUTED EARNINGS PER SHARE: Class A Common Stock | $2.42 | $1.58 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------- | :-------------------------------- | :-------------------------------- | | Net income | $47,268 | $30,606 | | Total other comprehensive income, net of tax | $2,573 | $486 | | COMPREHENSIVE INCOME | $49,841 | $31,092 | [Consolidated Statements of Stockholders' Equity (Unaudited)](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(UNAUDITED)) - For the three months ended March 31, 2025, the total stockholders' equity increased from **$992,029 thousand** at January 1, 2025, to **$1,034,089 thousand**. This increase was primarily driven by net income of **$47,268 thousand** and a net change in Accumulated Other Comprehensive Income (AOCI) of **$2,573 thousand**, partially offset by dividends declared on Common Stock totaling **$8,681 thousand**[17](index=17&type=chunk) - For the three months ended March 31, 2024, total stockholders' equity increased from **$912,756 thousand** at January 1, 2024, to **$935,583 thousand**. This was mainly due to net income of **$30,606 thousand** and a net change in AOCI of **$486 thousand**, partially offset by dividends declared on Common Stock totaling **$7,782 thousand**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $93,189 | $71,224 | | Net cash (used in) provided by investing activities | $118,213 | $(77,744) | | Net cash provided by financing activities | $149,467 | $236,316 | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $360,869 | $229,796 | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | $793,020 | $546,363 | [Notes to Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [1. Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Republic Bancorp, Inc. is a financial holding company operating through five reportable segments: Traditional Banking, Warehouse Lending, Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS). The first two constitute 'Core Bank' and the latter three 'Republic Processing Group' (RPG). The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim information. The Company adopted ASU 2024-02 on January 1, 2025, with immaterial impact, and is analyzing the impact of not-yet-effective ASUs 2023-09, 2024-03, and 2025-01. - Republic Bancorp, Inc. operates through five reportable segments: Traditional Banking, Warehouse Lending, Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS). Traditional Banking and Warehouse Lending form the 'Core Bank,' while TRS, RPS, and RCS form the 'Republic Processing Group' (RPG)[23](index=23&type=chunk) - The Company adopted ASU 2024-02, 'Codification Improvements—Amendments to Remove References to the Concepts Statements,' on January 1, 2025, with an immaterial financial statement impact[50](index=50&type=chunk) - The Company is currently analyzing the impact of not-yet-effective ASUs 2023-09 (Income Taxes), 2024-03 (Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures), and 2025-01 (Clarifying the Effective Date of ASU 2024-03) on its financial statements[52](index=52&type=chunk) [2. Investment Securities](index=19&type=section&id=2.%20INVESTMENT%20SECURITIES) The Company's investment portfolio includes Available-for-Sale (AFS) and Held-to-Maturity (HTM) debt securities, and equity securities. As of March 31, 2025, AFS debt securities had a fair value of $609.3 million with gross unrealized losses of $15.6 million, primarily due to interest rate changes. HTM debt securities totaled $5.6 million. There were no material gains or losses on sales of AFS debt securities. Equity securities, primarily Freddie Mac preferred stock, had a fair value of $724 thousand. Available-for-Sale Debt Securities (in thousands) | Available-for-Sale Debt Securities (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Amortized Cost | $622,748 | $602,493 | | Fair Value | $609,327 | $584,155 | | Gross Unrealized Gains | $2,190 | $1,825 | | Gross Unrealized Losses | $(15,611) | $(20,163) | - As of March 31, 2025, 103 out of 182 securities in the Bank's portfolio were in an unrealized loss position. These losses are attributed to changes in interest rates and illiquidity, not credit quality, and management does not intend to sell these securities before anticipated recovery[58](index=58&type=chunk)[60](index=60&type=chunk) Equity Securities (in thousands) | Equity Securities (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------- | :------------- | :---------------- | | Fair Value (Freddie Mac preferred stock) | $724 | $693 | | Unrealized Gains (Freddie Mac preferred stock) | $724 | $693 | | Total gains/losses recognized in income (3 months ended March 31) | $31 | $61 | [3. Loans Held for Sale](index=23&type=section&id=3.%20LOANS%20HELD%20FOR%20SALE) The Bank originates mortgage and consumer loans for sale. Mortgage loans held for sale are valued at fair value, while consumer loans held for sale are carried at either fair value (RCS installment loans) or the lower of cost or fair value (RCS line-of-credit and healthcare receivables). During Q1 2025, $5 million of consumer credit cards were reclassified from held for investment to held for sale. Consumer Loans Held for Sale, at Fair Value (in thousands) | Consumer Loans Held for Sale, at Fair Value (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Balance, beginning of period | $5,443 | $7,914 | | Origination of consumer loans held for sale | $34,347 | $35,159 | | Proceeds from the sale of consumer loans held for sale | $(32,020) | $(38,011) | | Net gain on sale of consumer loans held for sale | $832 | $1,031 | | Balance, end of period | $8,602 | $6,093 | Consumer Loans Held for Sale, at Lower of Cost or Fair Value (in thousands) | Consumer Loans Held for Sale, at Lower of Cost or Fair Value (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance, beginning of period | $18,632 | $16,094 | | Origination of consumer loans held for sale | $232,304 | $153,188 | | Transferred from held for investment to held for sale | $4,977 | $0 | | Proceeds from the sale of consumer loans held for sale | $(234,613) | $(158,573) | | Net gain on sale of consumer loans held for sale | $2,223 | $2,374 | | Balance, end of period | $23,523 | $13,083 | - During March 2025, management agreed to sell **$5 million** of consumer credit cards previously classified as held for investment, transferring them to held for sale as of March 31, 2025. The sale is expected to complete in Q2 2025[69](index=69&type=chunk) [4. Loans and Allowance for Credit Losses](index=24&type=section&id=4.%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) The Company's total loans decreased by $149.7 million (2.8%) from December 31, 2024, to March 31, 2025, primarily due to significant paydowns in the Tax Refund Solutions (TRS) segment. The Allowance for Credit Losses on Loans (ACLL) increased by $14.3 million (15.6%) to $106.3 million, mainly driven by the TRS segment. Nonperforming loans slightly increased to 0.43% of total loans, while delinquent loans decreased to 0.33%. Loan modifications primarily involved principal deferrals for Republic Processing Group (RPG) loans. Loan Portfolio Composition (in thousands) | Loan Portfolio Composition (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------ | :------------- | :---------------- | | Traditional Banking | $4,566,359 | $4,569,179 | | Warehouse lines of credit | $569,502 | $550,760 | | Tax Refund Solutions | $36,185 | $190,794 | | Republic Credit Solutions | $117,747 | $128,733 | | Total loans | $5,289,793 | $5,439,466 | | Allowance for credit losses | $(106,303) | $(91,978) | | Total loans, net | $5,183,490 | $5,347,488 | ACLL Roll-forward (in thousands) | ACLL Roll-forward (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Beginning Balance | $91,978 | $82,130 | | Provision | $17,672 | $30,622 | | Charge-offs | $(4,525) | $(4,927) | | Recoveries | $1,178 | $877 | | Ending Balance | $106,303 | $108,702 | Nonperforming Loans and Assets (in thousands) | Nonperforming Loans and Assets (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Total nonperforming loans | $22,850 | $22,760 | | Other real estate owned | $1,107 | $1,160 | | Total nonperforming assets | $23,957 | $23,920 | | Nonperforming loans to total loans | 0.43% | 0.42% | | ACLL to nonperforming loans | 465% | 404% | Delinquent Loans (30+ days past due, in thousands) | Delinquent Loans (30+ days past due, in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | | Total delinquent loans | $17,313 | $20,489 | | Delinquency ratio (Total loans 30+ days past due / Total loans) | 0.33% | 0.38% | - Loan modifications for borrowers experiencing financial difficulty during the three months ended March 31, 2025, primarily involved principal deferrals for **265 Republic Processing Group (RPG) loans**, totaling **$63 thousand** in amortized cost basis[96](index=96&type=chunk)[98](index=98&type=chunk) [5. Deposits](index=41&type=section&id=5.%20DEPOSITS) Total deposits increased by $195.3 million (4%) from December 31, 2024, to March 31, 2025, reaching $5.4 billion. Core Bank deposits grew by $175.4 million, with interest-bearing deposits increasing by $149.3 million, driven by money market accounts. Republic Processing Group (RPG) deposits increased by $19.9 million, reflecting a significant decrease in wholesale brokered deposits offset by growth in interest-bearing prepaid card deposits and other noninterest-bearing deposits. Deposit Composition (in thousands) | Deposit Composition (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------- | :------------- | :---------------- | | Core Bank: | | | | Noninterest-bearing | $1,149,353 | $1,123,208 | | Interest-bearing | $3,632,520 | $3,483,250 | | Total Core Bank deposits | $4,781,873 | $4,606,458 | | Republic Processing Group: | | | | Noninterest-bearing | $225,881 | $84,556 | | Interest-bearing | $398,138 | $519,532 | | Total RPG deposits | $624,019 | $604,088 | | Total deposits | $5,405,892 | $5,210,546 | - Core Bank interest-bearing deposits increased by **$149.3 million**, primarily due to a **$124 million** growth in interest-bearing IOLTA, business, and consumer money market accounts[107](index=107&type=chunk)[360](index=360&type=chunk) - RPG deposits saw a **$182.7 million** decrease in wholesale brokered deposits, offset by a **$61.7 million** increase in interest-bearing prepaid card deposits and a **$139.9 million** increase in other noninterest-bearing deposits[107](index=107&type=chunk) [6. Securities Sold Under Agreements to Repurchase and Other Short-Term Borrowings](index=42&type=section&id=6.%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE%20AND%20OTHER%20SHORT-TERM%20BORROWINGS) Securities sold under agreements to repurchase (SSUARs) and other short-term borrowings decreased to $89.7 million as of March 31, 2025, from $103.3 million at December 31, 2024. All SSUARs had overnight maturities. The weighted average interest rate at period-end was 0.58% (up from 0.53%), and the average outstanding balance during the quarter was $108.8 million. (dollars in thousands) | (dollars in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------- | :------------- | :---------------- | | Outstanding balance at end of period | $89,718 | $103,318 | | Weighted average interest rate at end of period | 0.58% | 0.53% | | Fair value of securities pledged | $125,761 | $151,972 | (dollars in thousands) | (dollars in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------- | :-------------------------------- | :-------------------------------- | | Average outstanding balance during the period | $108,760 | $102,592 | | Weighted average interest rate during the period | 0.51% | 0.51% | | Maximum outstanding at any month end during the period | $112,826 | $113,281 | [7. Federal Home Loan Bank Advances](index=43&type=section&id=7.%20FEDERAL%20HOME%20LOAN%20BANK%20ADVANCES) Federal Home Loan Bank (FHLB) advances decreased to $370 million as of March 31, 2025, from $395 million at December 31, 2024, with no overnight advances outstanding. The total weighted average cost of advances, including swaps, was 4.35%. The Bank had $722 million in available borrowing capacity from the FHLB and $100 million in unsecured lines of credit from other financial institutions. (in thousands) | (in thousands) | March 31, 2025 | December 31, 2024 | | :------------- | :------------- | :---------------- | | Overnight advances | $0 | $25,000 | | Fixed interest rate advances | $370,000 | $370,000 | | Total FHLB advances | $370,000 | $395,000 | - As of March 31, 2025, Republic had available borrowing capacity of **$722 million** from the FHLB and **$100 million** in unsecured lines of credit from other financial institutions[112](index=112&type=chunk) - The Bank extended **$100 million** of FHLB borrowings in May/June 2024 through a fixed-rate swap, locking in an annualized cost of **4.42%** over five years. The total weighted average cost of all advances, including swaps, is **4.35%**[113](index=113&type=chunk) [8. Off Balance Sheet Risks, Commitments and Contingent Liabilities](index=45&type=section&id=8.%20OFF%20BALANCE%20SHEET%20RISKS,%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) The Company is exposed to off-balance sheet risks primarily through commitments to extend credit and standby letters of credit. Total commitments increased to $2.03 billion as of March 31, 2025, from $1.99 billion at December 31, 2024. The Allowance for Credit Losses on Off-Balance Sheet Credit Exposures (ACLC) increased by $20 thousand to $1.51 million, reflecting the increase in unused commitments. Commitments (in thousands) | Commitments (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------- | :------------- | :---------------- | | Unused warehouse lines of credit | $405,998 | $404,240 | | Unused home equity lines of credit | $481,676 | $478,040 | | Unused loan commitments - other | $1,128,625 | $1,093,990 | | Standby letters of credit | $11,070 | $11,282 | | Total commitments | $2,027,369 | $1,987,552 | ACLC Roll-forward (in thousands) | ACLC Roll-forward (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Beginning Balance | $1,490 | $1,340 | | Provision | $20 | $(110) | | Ending Balance | $1,510 | $1,230 | [9. Fair Value](index=47&type=section&id=9.%20FAIR%20VALUE) Fair value measurements are categorized into Level 1, 2, or 3 inputs. AFS debt securities are primarily valued using matrix pricing (Level 2), with U.S. Treasury securities at Level 1 and a private label mortgage-backed security and Trust Preferred Security at Level 3. Mortgage loans held for sale are Level 2, while consumer loans held for sale are Level 3. The Company also details fair value measurements for mortgage banking derivatives, interest rate swaps, collateral-dependent loans, and other real estate owned, with most non-recurring measurements falling into Level 3 due to unobservable inputs like appraisal discounts. - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[121](index=121&type=chunk)[122](index=122&type=chunk) - AFS debt securities are primarily valued using matrix pricing (Level 2), U.S. Treasury securities use quoted market prices (Level 1), and a private label mortgage-backed security and Trust Preferred Security are valued using Level 3 inputs due to illiquidity and unobservable bid prices[123](index=123&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk) - Mortgage loans held for sale are classified as Level 2, while consumer loans held for sale (RCS installment loans) are Level 3, based on contractual sales terms[128](index=128&type=chunk) - Collateral-dependent loans and Other Real Estate Owned (OREO) are generally measured at fair value less costs to sell, often based on appraisals or BPOs with significant adjustments, resulting in Level 3 classification[132](index=132&type=chunk)[133](index=133&type=chunk) Fair Value Measurements (in thousands) | Fair Value Measurements (in thousands) | Level 1 | Level 2 | Level 3 | Total Fair Value | | :----------------------------------- | :------ | :------ | :------ | :--------------- | | **Financial Assets (March 31, 2025):** | | | | | | Available-for-sale debt securities | $54,761 | $548,978 | $5,588 | $609,327 | | Equity securities | $0 | $724 | $0 | $724 | | Mortgage loans held for sale | $0 | $9,140 | $0 | $9,140 | | Consumer loans held for sale | $0 | $0 | $8,602 | $8,602 | | Interest rate swap agreements | $0 | $6,723 | $0 | $6,723 | | **Financial Liabilities (March 31, 2025):** | | | | | | Mandatory forward contracts | $0 | $69 | $0 | $69 | | Interest rate swap agreements | $0 | $8,856 | $0 | $8,856 | [10. Mortgage Banking Activities](index=59&type=section&id=10.%20MORTGAGE%20BANKING%20ACTIVITIES) Mortgage banking activities include residential mortgage originations and servicing. Mortgage loans held for sale increased to $9.1 million as of March 31, 2025. Total mortgage banking income significantly increased to $1.8 million for Q1 2025 from $310 thousand in Q1 2024, driven by higher net gains on loan sales and fair value adjustments. The fair value of Mortgage Servicing Rights (MSRs) was $17.0 million, with a weighted average prepayment rate of 130%. The Bank uses mandatory forward sales contracts and interest rate lock loan commitments as derivatives to manage interest rate risk. Mortgage Loans Held for Sale Activity (in thousands) | Mortgage Loans Held for Sale Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Balance, beginning of period | $8,312 | $3,227 | | Origination of mortgage loans held for sale | $41,233 | $27,046 | | Proceeds from the sale of mortgage loans held for sale | $(41,816) | $(18,773) | | Net gain (loss) on mortgage loans held for sale | $1,411 | $(80) | | Balance, end of period | $9,140 | $80,884 | Components of Mortgage Banking Income (in thousands) | Components of Mortgage Banking Income (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net gain (loss) recognized | $1,411 | $(80) | | Net servicing income recognized | $410 | $390 | | Total mortgage banking income | $1,821 | $310 | - The fair value of the mortgage servicing rights portfolio was **$16.975 million** as of March 31, 2025, with a monthly weighted average prepayment rate of **130%** and a weighted average life of **4.54 years**[155](index=155&type=chunk) - The Bank uses mandatory forward sales contracts and interest rate lock loan commitments as derivatives to manage interest rate risk on loans held for sale and rate lock commitments. These instruments typically expire within **90 days**[156](index=156&type=chunk)[158](index=158&type=chunk) [11. Interest Rate Swaps](index=63&type=section&id=11.%20INTEREST%20RATE%20SWAPS) The Bank uses interest rate swaps for both cash flow hedging and to facilitate client transactions. Three swaps designated as cash flow hedges for FHLB advances had a notional amount of $100 million and a fair value of $(2.1) million as of March 31, 2025. Non-hedge swaps, used for client transactions, had a total notional amount of $465.3 million, with offsetting positions to minimize risk, resulting in a net fair value of $0. Counterparties and the Bank are required to pledge collateral for net loss positions exceeding $250,000. - The Bank has three interest rate swap agreements designated as cash flow hedges for FHLB advances, with a notional amount of **$100 million** and a fair value of **$(2.133) million** as of March 31, 2025. The effective portion of unrealized gains/losses is recorded in OCI[161](index=161&type=chunk)[162](index=162&type=chunk) - Non-hedge interest rate swaps are used to facilitate client transactions, with offsetting positions to minimize the Bank's interest rate risk. Changes in their fair value are recognized in current period earnings[163](index=163&type=chunk) Non-hedge Interest Rate Swaps (in thousands) | Non-hedge Interest Rate Swaps (in thousands) | March 31, 2025 Notional Amount | March 31, 2025 Fair Value | December 31, 2024 Notional Amount | December 31, 2024 Fair Value | | :------------------------------------------- | :----------------------------- | :------------------------ | :----------------------------- | :------------------------ | | Interest rate swaps with Bank clients - Total | $232,660 | $(1,037) | $232,328 | $(4,448) | | Offsetting interest rate swaps with institutional swap dealer - Total | $232,660 | $1,037 | $232,328 | $4,448 | | Total | $465,320 | $0 | $464,656 | $0 | [12. Earnings Per Share](index=66&type=section&id=12.%20EARNINGS%20PER%20SHARE) The Company calculates earnings per share using the two-class method, distinguishing between Class A and Class B Common Stock due to a 10% cash dividend premium on Class A shares. For the three months ended March 31, 2025, basic EPS for Class A was $2.43 and diluted EPS was $2.42. For the same period in 2024, basic EPS for Class A was $1.59 and diluted EPS was $1.58. - The Company uses the two-class method for EPS calculation, allocating earnings based on dividends and participation rights, with Class A Common Stock receiving a **10% cash dividend premium** over Class B[167](index=167&type=chunk) Earnings Per Share (Class A Common Stock) | Earnings Per Share (Class A Common Stock) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Basic Earnings Per Share | $2.43 | $1.59 | | Diluted Earnings Per Share | $2.42 | $1.58 | - Antidilutive stock options excluded from the diluted EPS calculation were **43,612** for Q1 2025 and **52,781** for Q1 2024[169](index=169&type=chunk) [13. Other Comprehensive Income](index=67&type=section&id=13.%20OTHER%20COMPREHENSIVE%20INCOME) Total other comprehensive income (OCI), net of tax, was $2.573 million for the three months ended March 31, 2025, compared to $486 thousand for the same period in 2024. This change was primarily driven by a net unrealized gain on AFS debt securities of $3.687 million, partially offset by a net unrealized loss on derivatives of $(1.114) million, both net of tax. OCI Components (in thousands, net of tax) | OCI Components (in thousands, net of tax) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Unrealized gain on AFS debt securities | $3,687 | $486 | | Net losses on derivatives | $(1,114) | $0 | | Total other comprehensive income components, net of tax | $2,573 | $486 | AOCI Balances (in thousands, net of tax) | AOCI Balances (in thousands, net of tax) | December 31, 2024 | Change (Q1 2025) | March 31, 2025 | | :------------------------------------- | :---------------- | :--------------- | :------------- | | Unrealized gain (loss) on AFS debt securities | $(13,753) | $3,687 | $(10,066) | | Unrealized loss on derivatives | $(485) | $(1,114) | $(1,599) | | Total unrealized gain (loss) | $(14,238) | $2,573 | $(11,665) | [14. Revenue from Contracts with Customers](index=68&type=section&id=14.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total net revenue for the Company increased to $135.8 million for Q1 2025, up from $120.3 million in Q1 2024. Core Banking contributed 53% of net revenue, while Republic Processing Group (RPG) contributed 47%. Key revenue streams subject to ASC 606 include service charges on deposit accounts, net refund transfer fees, interchange fee income, and net gains/losses on other real estate owned (OREO). Total Net Revenue (in thousands) | Total Net Revenue (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Total net revenue | $135,842 | $120,292 | | Net-revenue concentration: | | | | Core Banking | 53% | 48% | | Republic Processing Group | 47% | 52% | - Service charges on deposit accounts are earned for account-based and event-driven services, recognized in close proximity to service performance or over the service period[173](index=173&type=chunk) - Net refund transfer fees are recognized immediately after a taxpayer's refund is disbursed, with the fee shared between the Bank and Tax Providers[174](index=174&type=chunk)[175](index=175&type=chunk) - Interchange fee income is earned as an 'issuing bank' on card transactions and recognized almost simultaneously upon transaction completion, presented net of cardholder reward costs[177](index=177&type=chunk)[178](index=178&type=chunk) - Net gains/losses on OREO reflect gains/losses upon executed deeds and mark-to-market write-downs during the holding period, with write-downs generally at least **10% annually**[179](index=179&type=chunk)[181](index=181&type=chunk) [15. Segment Information](index=71&type=section&id=15.%20SEGMENT%20INFORMATION) The Company operates through five reportable segments: Traditional Banking, Warehouse Lending (forming 'Core Banking'), Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS) (forming 'Republic Processing Group'). Segment performance is evaluated based on income before income taxes. Net interest income is allocated using an internal Funds Transfer Pricing (FTP) model. For Q1 2025, total net income was $47.3 million, with Core Banking contributing $17.4 million and RPG contributing $29.9 million. - The Company's five reportable segments are Traditional Banking, Warehouse Lending (Core Banking), Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS) (Republic Processing Group)[184](index=184&type=chunk) - Segment performance is evaluated using income before income tax expense, and net interest income is allocated based on underlying financial instruments and an internal Funds Transfer Pricing (FTP) model[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) Segment Net Income (in thousands) | Segment Net Income (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Traditional Banking | $15,712 | $12,283 | | Warehouse Lending | $1,649 | $839 | | Total Core Banking | $17,361 | $13,122 | | Tax Refund Solutions | $19,611 | $8,793 | | Republic Payment Solutions | $2,895 | $2,567 | | Republic Credit Solutions | $7,401 | $6,124 | | Total Republic Processing Group | $29,907 | $17,484 | | Total Company | $47,268 | $30,606 | [16. Low-Income Housing Tax Credit Investments](index=74&type=section&id=16.%20LOW-INCOME%20HOUSING%20TAX%20CREDIT%20INVESTMENTS) The Company invests in low-income housing partnerships, expecting to recover investments through tax credits. These investments are amortized as a component of income tax expense. As of March 31, 2025, net investments totaled $53.188 million, with unfunded obligations of $49.820 million. For Q1 2025, amortization expense was $2.305 million, and tax credits recognized were $(3.175) million. - The Company's low-income housing investments are accounted for using the proportional amortization method, with recovery expected through tax credits[190](index=190&type=chunk)[191](index=191&type=chunk) Low-Income Housing Tax Credit Investments (in thousands) | Low-Income Housing Tax Credit Investments (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------------------------------- | :------------- | :---------------- | | Investments (Gross) | $77,392 | $72,415 | | Life-to-date amortization | $(24,204) | $(21,899) | | Investments (Net) | $53,188 | $50,516 | | Unfunded Obligations | $49,820 | $54,797 | Amortization and Tax Credits (in thousands) | Amortization and Tax Credits (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Amortization expense | $2,305 | $1,783 | | Tax credits recognized | $(3,175) | $(2,691) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=74&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the Company's financial performance and condition, including an overview of critical accounting policies, business segments, recent developments, and a detailed comparison of results of operations and financial condition for the three months ended March 31, 2025, versus March 31, 2024, and March 31, 2025, versus December 31, 2024. It also discusses forward-looking statements, critical accounting estimates related to the Allowance for Credit Losses (ACLL), and asset/liability management strategies. [Forward-looking Statements](index=74&type=section&id=Forward-looking%20statements) - Forward-looking statements discuss future events or conditions and include projections of financial items, descriptions of future plans, and management strategies. They are based on information known at the time and are not guarantees, subject to various known and unknown risks and uncertainties[195](index=195&type=chunk)[196](index=196&type=chunk)[198](index=198&type=chunk) - Key risks and uncertainties include inflation, litigation, natural disasters, changes in economic conditions, interest rate fluctuations, competitive pressures, market volatility, client bankruptcies, regulatory changes, accounting standard changes, cybersecurity attacks, and the success of new core system implementation[198](index=198&type=chunk)[200](index=200&type=chunk) [Critical Accounting Policies and Estimates](index=76&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - The preparation of financial statements requires management to make estimates and assumptions, with critical accounting policies being those most important to financial condition and operating results, requiring difficult, subjective, and complex estimates[199](index=199&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - The Allowance for Credit Losses on Loans (ACLL) and Provision are considered critical accounting estimates, relying significantly on historical loss rates, quantitative and qualitative economic factors, and reasonable/supportable forecasts[204](index=204&type=chunk)[205](index=205&type=chunk) - During Q1 2025, the Commercial Real Estate portfolio was further segmented into Owner Occupied, Nonowner Occupied, and Multi-family to provide better granularity to the ACLL, though this did not have a material impact as of March 31, 2025[208](index=208&type=chunk) [Business Segment Composition](index=78&type=section&id=BUSINESS%20SEGMENT%20COMPOSITION) - The Company is divided into five reportable segments: Traditional Banking, Warehouse Lending (collectively 'Core Bank'), Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS) (collectively 'Republic Processing Group')[209](index=209&type=chunk) - Traditional Banking provides traditional banking products primarily to customers in its market footprint through **47 banking centers** across Kentucky, Indiana, Florida, Ohio, and Tennessee[211](index=211&type=chunk)[217](index=217&type=chunk) - Warehouse Lending offers short-term, revolving credit facilities to mortgage bankers nationwide, primarily secured by single-family, first-lien residential real estate loans, with individual loans typically on the line for **15-30 days**[228](index=228&type=chunk) - TRS facilitates federal and state tax refund products and offers Refund Advance (RA) and Early Season Refund Advance (ERA) credit products through Tax Providers, with most business occurring in the first half of the year[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - RPS offers prepaid and debit solutions (payroll and GPR cards, DDA/savings accounts) and money movement capabilities (ACH, wire transfer, check processing) to consumers through third-party providers[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - RCS offers unsecured, small-dollar consumer credit products, including line-of-credit products (LOC I and LOC II with **90%** and **95%** participation interests sold, respectively) and installment loans, primarily to subprime or near-prime borrowers[243](index=243&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) [Recent Developments](index=90&type=section&id=Recent%20Developments) - The Company's largest Tax Provider contract within TRS, which expires in October 2025, is not expected to be renewed. This provider accounted for approximately **67%** of total ERA/RA originations and **22%** of net RT revenue for Q1 2025, representing about **26%** of TRS's pre-tax net income for the 12 months ended March 31, 2025[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) [Overview (Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024)](index=90&type=section&id=OVERVIEW%20(Three%20Months%20Ended%20March%2031,%202025%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202024)) - Total Company net income for Q1 2025 increased by **$16.7 million (54.5%)** to **$47.3 million** compared to **$30.6 million** in Q1 2024. Diluted EPS rose from **$1.58** to **$2.42**[13](index=13&type=chunk)[251](index=251&type=chunk) - **Traditional Banking:** Net income increased **$3.4 million (28%)**, driven by a **$5.1 million (10%)** rise in net interest income and a **$7.1 million (85%)** increase in noninterest income, partially offset by an **$8.5 million (21%)** increase in noninterest expense[254](index=254&type=chunk) - **Warehouse Lending:** Net income increased **$810,000 (97%)**, with net interest income up **$771,000 (34%)** due to a **$118 million** increase in average outstanding balances and higher line usage (**47% vs. 37%**)[255](index=255&type=chunk) - **Tax Refund Solutions (TRS):** Net income increased **$10.8 million (123%)**, despite a **$1.1 million (4%)** decrease in net interest income. Noninterest income increased **$3.1 million (28%)**, primarily from net RT revenue, while noninterest expense decreased from **$4.5 million** to **$3.2 million**. Provision decreased from **$25.8 million** to **$15.4 million**[256](index=256&type=chunk) - **Republic Payment Solutions (RPS):** Net income increased **$328,000 (13%)**, with net interest income up **$486,000 (14%)**. Noninterest income remained stable, and noninterest expense slightly increased[257](index=257&type=chunk) - **Republic Credit Solutions (RCS):** Net income increased **$1.3 million (21%)**, with net interest income up **$548,000 (5%)**. Provision decreased from **$4.2 million** to **$3.0 million**, while noninterest income decreased **$351,000 (10%)**[258](index=258&type=chunk)[260](index=260&type=chunk) [Results of Operations (Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024)](index=92&type=section&id=RESULTS%20OF%20OPERATIONS%20(Three%20Months%20Ended%20March%2031,%202025%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202024)) This section details the changes in net interest income, provision for credit losses, noninterest income, and noninterest expense for the three months ended March 31, 2025, compared to the same period in 2024. Net interest income increased by $5.8 million, driven by a higher net interest margin. The total provision for credit losses decreased significantly, primarily due to lower estimated loan losses in TRS. Noninterest income saw a substantial increase, mainly from mortgage banking and a gain on Visa shares, while noninterest expense rose due to higher salaries, technology costs, and core conversion fees. [Net Interest Income](index=92&type=section&id=Net%20Interest%20Income) - Total Company net interest income increased by **$5.8 million (6%)** to **$102.7 million** in Q1 2025, up from **$96.9 million** in Q1 2024. The net interest margin (NIM) increased by **41 basis points** to **6.28%**[267](index=267&type=chunk) - Traditional Banking's net interest income increased by **$5.1 million (10%)** to **$53.3 million**, with NIM rising from **3.33%** to **3.79%**. This was driven by a higher NIM and growth in average interest-earning assets[268](index=268&type=chunk) - Warehouse Lending's net interest income increased by **$771,000 (34%)**, primarily due to a **$118 million (35%)** increase in average outstanding Warehouse balances and higher average line usage (**47% vs. 37%**)[273](index=273&type=chunk) - Republic Payment Solutions' net interest income increased by **$486,000**, mainly due to a reduction in the segment's revenue share component, as the largest marketer-servicer did not meet contractual thresholds for revenue share in Q1 2025[276](index=276&type=chunk)[277](index=277&type=chunk) - Management believes future reductions to the Federal Funds Target Rate (FFTR) will likely negatively impact the Company's net interest income and NIM, especially for Traditional Banking, due to the continuing shift from noninterest-bearing to interest-bearing deposits and potential pricing floors[266](index=266&type=chunk)[271](index=271&type=chunk) Net Change in Net Interest Income (in thousands) | Net Change in Net Interest Income (in thousands) | Total Net Change | Increase / (Decrease) Due to Volume | Increase / (Decrease) Due to Rate | | :--------------------------------------------- | :--------------- | :---------------------------------- | :------------------------------ | | Net change in interest income | $(794) | $844 | $(1,638) | | Net change in interest expense | $(6,563) | $(178) | $(6,385) | | Net change in net interest income | $5,769 | $1,022 | $4,747 | [Provision for Expected Credit Loss Expense](index=101&type=section&id=Provision) - Total Company Provision was a net charge of **$17.7 million** for Q1 2025, a significant decrease from **$30.6 million** in Q1 2024[289](index=289&type=chunk) - **Traditional Banking:** Recorded a net credit of **$769,000** in Q1 2025 (vs. net charge of **$358,000** in Q1 2024), driven by a **$414,000** credit from reclassifying consumer credit cards to held for sale and a **$491,000** credit due to general improvement in historical loss rates[290](index=290&type=chunk) - **Warehouse Lending:** Recorded a net charge of **$47,000** in Q1 2025 (vs. **$309,000** in Q1 2024), reflecting changes in general reserves consistent with outstanding period-end balances[293](index=293&type=chunk) - **Tax Refund Solutions (TRS):** Recorded a net charge of **$15.4 million** in Q1 2025 (vs. **$25.8 million** in Q1 2024), primarily due to better U.S. Treasury payments and a larger percentage of ERA Provision recorded in Q4 2024[295](index=295&type=chunk) - **Republic Credit Solutions (RCS):** Recorded a net charge of **$3.0 million** in Q1 2025 (vs. **$4.2 million** in Q1 2024), mainly due to a **$1.1 million** decrease in Provision for the LOC II product, driven by declining period-end loan balances[297](index=297&type=chunk)[301](index=301&type=chunk) Credit Quality Ratios - Total Company | Credit Quality Ratios - Total Company | March 31, 2025 | March 31, 2024 | | :------------------------------------ | :------------- | :------------- | | ACLL to total loans | 2.01% | 2.08% | | ACLL to nonperforming loans | 465% | 509% | | Net loan charge-offs (recoveries) to average loans | 0.24% | 0.30% | - The Company's net charge-offs to average total Company loans decreased from **0.30%** in Q1 2024 to **0.24%** in Q1 2025, driven by a **$659,000** decrease in RPG net charge-offs[308](index=308&type=chunk) [Noninterest Income](index=107&type=section&id=Noninterest%20Income) - Total Company noninterest income increased by **$9.8 million** in Q1 2025 compared to Q1 2024[310](index=310&type=chunk) - **Traditional Banking:** Noninterest income increased **$7.1 million (85%)**, primarily due to a **$1.5 million** increase in Mortgage Banking income (including a negative fair value adjustment in Q1 2024), a **$4.1 million** gain on sale of Visa Class B-1 shares, and a **$1.6 million** insurance recovery[310](index=310&type=chunk)[312](index=312&type=chunk) - **Tax Refund Solutions (TRS):** Noninterest income increased from **$10.9 million** to **$13.9 million**, driven by a **$3.1 million** increase in net RT fees due to a **30%** increase in per-unit profitability from price increases and minimal changes in revenue sharing[315](index=315&type=chunk) [Noninterest Expense](index=107&type=section&id=Noninterest%20Expense) - Total Company noninterest expense increased to **$58.2 million** for Q1 2025, up from **$51.0 million** in Q1 2024[313](index=313&type=chunk) - **Traditional Banking:** Noninterest expense increased **$8.5 million (21%)**. Key drivers included a **$1.6 million (7%)** increase in salaries and employee benefits (due to higher bonus-related expenses), a **$296,000 (24%)** increase in equipment expenses (obsolete fixed assets write-down), and a **$625,000 (13%)** increase in technology expenses (enhanced security, new ancillary systems)[314](index=314&type=chunk)[316](index=316&type=chunk) - The Traditional Bank also recorded **$5.7 million** in Core Contract deconversion and consulting fees, including **$4.1 million** for contract negotiation assistance (based on anticipated savings of over **$16 million** over five years) and **$1.6 million** for data conversion and system migration costs for a new core system targeting Q3 2025 launch[321](index=321&type=chunk) [Comparison of Financial Condition as of March 31, 2025 and December 31, 2024](index=109&type=section&id=COMPARISON%20OF%20FINANCIAL%20CONDITION%20AS%20OF%20MARCH%2031,%202025%20AND%20DECEMBER%2031,%202024) This section compares the Company's financial condition at March 31, 2025, to December 31, 2024. Cash and cash equivalents significantly increased due to a strategic decision to hold more liquid assets. The investment portfolio grew slightly, while gross loans decreased, primarily in the Tax Refund Solutions segment. The Allowance for Credit Losses on Loans (ACLL) increased, mainly for Refund Advances. Asset quality metrics showed a slight increase in nonperforming loans but a decrease in delinquent loans. Deposits increased overall, with Core Bank growth and shifts within RPG. FHLB advances decreased, and liquidity remained strong with substantial borrowing capacity. Total stockholders' equity increased, and regulatory capital ratios exceeded 'well-capitalized' requirements. [Cash and Cash Equivalents](index=109&type=section&id=Cash%20and%20Cash%20Equivalents) - Cash and cash equivalents increased significantly to **$793 million** as of March 31, 2025, from **$432 million** at December 31, 2024. This increase was a strategic decision to maintain additional on-balance sheet liquidity due to the inverted yield curve, making overnight cash more appealing than longer-term investments[317](index=317&type=chunk)[318](index=318&type=chunk) - Average interest-earning cash and cash equivalent balances were **$517 million** for Q1 2025, compared to **$454 million** for Q1 2024, earning a weighted-average yield of **4.45%** for cash held at the FRB[317](index=317&type=chunk)[319](index=319&type=chunk) [Investment Securities](index=109&type=section&id=Investment%20Securities) - Republic's total investment portfolio increased by **$22 million** from December 31, 2024, to March 31, 2025, driven by **$135 million** in security purchases and **$2 million** in FHLB stock, partially offset by calls, maturities, and paydowns[320](index=320&type=chunk) Purchases of Investment Securities (in thousands) | Purchases of Investment Securities (in thousands) | Purchase Cost | Yield to Maturity | Estimated Weighted Average Life | | :---------------------------------------------- | :------------ | :---------------- | :------------------------------ | | U.S. Government Agencies | $55,000 | 5.01% | 4.86 yrs | | Mortgage-backed securities | $79,584 | 5.20% | 5.53 yrs | | Total | $134,584 | 5.12% | 5.26 yrs | [Loan Portfolio](index=111&type=section&id=Loan%20Portfolio) - Gross loans decreased by **$150 million (2.8%)** during Q1 2025 to **$5.3 billion** as of March 31, 2025[324](index=324&type=chunk) - **Traditional Banking:** Period-end balances decreased by **$3 million** (less than **1%**). Management maintained a stricter pricing strategy due to the inverted yield curve and elevated funding costs, potentially leading to further declines if payoffs outpace originations[324](index=324&type=chunk)[325](index=325&type=chunk) - **Warehouse Lending:** Outstanding balances increased by **$19 million**. The business is volatile and seasonal, highly dependent on the overall mortgage market and industry trends[327](index=327&type=chunk) - **Tax Refund Solutions (TRS):** Outstanding loans decreased by **$155 million**, primarily due to substantial paydowns of ERAs originated in December 2024 and commercial loans made to tax-related businesses[328](index=328&type=chunk)[329](index=329&type=chunk) Loan Portfolio Composition (in thousands) | Loan Portfolio Composition (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------------ | :------------- | :---------------- | :------- | :------- | | Traditional Banking | $4,566,359 | $4,569,179 | $(2,820) | (0.1)% | | Warehouse lines of credit | $569,502 | $550,760 | $18,742 | 3.4% | | Tax Refund Solutions | $36,185 | $138,614 | $(108,270) | (78.1)% | | Republic Credit Solutions | $117,747 | $128,733 | $(10,986) | (8.5)% | | Total loans | $5,289,793 | $5,439,466 | $(149,673) | (2.8)% | [Allowance for Credit Losses](index=113&type=section&id=Allowance%20for%20Credit%20Losses) - The Company's Allowance for Credit Losses on Loans (ACLL) increased to **$106 million** at March 31, 2025, from **$92 million** at December 31, 2024. As a percentage of total loans, ACLL increased from **1.69%** to **2.01%**[331](index=331&type=chunk) - **Traditional Banking:** ACLL decreased by approximately **$905,000** to **$59 million**, primarily due to a reduction in reserve requirements from a decrease in life-of-loan historical loss rates[331](index=331&type=chunk)[332](index=332&type=chunk) - **Warehouse Lending:** ACLL remained at approximately **$1 million**, or **0.25%** of total Warehouse loans, with no adjustments to the qualitative reserve percentage[333](index=333&type=chunk) - **Tax Refund Solutions (TRS):** ACLL increased, primarily for estimated Refund Advances (RAs) originated in Q1 2025. Total Allowance for RAs was **$26.0 million (3.22% of originations)** as of March 31, 2025. The final charge-off figures are finalized in Q2[334](index=334&type=chunk)[336](index=336&type=chunk) - **Republic Credit Solutions (RCS):** ACLL decreased by **$1 million** to **$20 million**, driven by a decrease in LOC I and LOC II spot loan balances. ACLL to total loans for RCS ranged from **0.25%** (healthcare receivables) to **70.63%** (line-of-credit products)[337](index=337&type=chunk) Management's Allocation of ACLL (in thousands) | Management's Allocation of ACLL (in thousands) | March 31, 2025 ACLL | March 31, 2025 % of Loans to Total | March 31, 2025 ACLL to Loan Class | December 31, 2024 ACLL | December 31, 2024 % of Loans to Total | December 31, 2024 ACLL to Loan Class | | :--------------------------------------------- | :------------------ | :---------------------------------- | :------------------------------- | :------------------- | :---------------------------------- | :------------------------------- | | Traditional Banking | $58,851 | 86% | 1.29% | $59,756 | 84% | 1.31% | | Warehouse lines of credit | $1,421 | 11% | 0.25% | $1,374 | 10% | 0.25% | | Tax Refund Solutions | $25,819 | 1% | 85.09% | $9,793 | 3% | 7.06% | | Republic Credit Solutions | $20,050 | 2% | 17.03% | $20,987 | 2% | 16.30% | | Total | $106,303 | 100% | 2.01% | $91,978 | 100% | 1.69% | [Asset Quality](index=116&type=section&id=Asset%20Quality) - Classified and Special Mention loans increased by approximately **$1.5 million** during Q1 2025, primarily due to a **$3.2 million** increase in residential real estate substandard loans[340](index=340&type=chunk) Classified and Special Mention Loans (in thousands) | Classified and Special Mention Loans (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------------------------ | :------------- | :---------------- | :------- | :------- | | Total Classified Loans | $31,730 | $28,728 | $3,002 | 10% | | Total Special Mention Loans | $52,756 | $54,283 | $(1,527) | (3)% | | Total Classified and Special Mention Loans | $84,486 | $83,011 | $1,475 | 2% | - Nonperforming loans to total loans increased slightly to **0.43%** as of March 31, 2025, from **0.42%** at December 31, 2024. The ACLL to total nonperforming loans increased to **465%** from **404%**[343](index=343&type=chunk)[344](index=344&type=chunk) Nonperforming Loans and Assets Summary (in thousands) | Nonperforming Loans and Assets Summary (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------------------------- | :------------- | :---------------- | | Total nonperforming loans | $22,850 | $22,760 | | Nonperforming loans to total loans | 0.43% | 0.42% | | ACLL to nonperforming loans | 465% | 404% | - Total Company delinquent loans (**30+ days past due**) to total loans decreased to **0.33%** as of March 31, 2025, from **0.38%** at December 31, 2024[352](index=352&type=chunk) Delinquent Loan Composition (in thousands) | Delinquent Loan Composition (in thousands) | March 31, 2025 | December 31, 2024 | | :--------------------------------------- | :------------- | :---------------- | | Total delinquent loans | $17,313 | $20,489 | | Delinquency ratio | 0.33% | 0.38% | [Deposits](index=121&type=section&id=Deposits) - Total period-end deposits increased by **$195 million (4%)** from December 31, 2024, to **$5.4 billion** as of March 31, 2025[359](index=359&type=chunk) - **Core Bank:** Deposits increased by **$175 million**, with interest-bearing deposits up **$149 million** (driven by IOLTA, business, and consumer money market accounts) and noninterest-bearing deposits up **$26 million**[359](index=359&type=chunk)[360](index=360&type=chunk) - **Republic Processing Group (RPG):** Deposits increased by **$20 million**, a net result of a **$161 million** increase in noninterest-bearing TRS deposits (from RTs), a **$200 million** decline in interest-bearing TRS brokered deposits, a **$7 million** increase in RCS deposits, and a **$51 million** increase in prepaid card balances[361](index=361&type=chunk)[366](index=366&type=chunk) Deposit Composition (in thousands) | Deposit Composition (in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------- | :------------- | :---------------- | :------- | :------- | | Total Core Bank deposits | $4,781,873 | $4,606,458 | $175,415 | 4% | | Total Republic Processing Group deposits | $624,019 | $604,088 | $19,931 | 3% | | Total deposits | $5,405,892 | $5,210,546 | $195,346 | 4% | [Federal Home Loan Bank Advances](index=122&type=section&id=Federal%20Home%20Loan%20Bank%20Advances) - Total FHLB advances decreased to **$370 million** as of March 31, 2025, from **$395 million** at December 31, 2024, with no overnight borrowings outstanding. The weighted-average maturity was **3.11 years**, and the weighted-average cost was **4.35%** (including swaps)[362](index=362&type=chunk)[363](index=363&type=chunk) [Interest Rate Swaps](index=122&type=section&id=Interest%20Rate%20Swaps) - The Bank uses interest rate swaps for client transactions and to manage interest rate risk, entering into offsetting positions for non-hedge swaps. Additionally, **$100 million** in notional balance sheet related interest rate swaps were entered into in Q2 2024 to leverage attractive long-term pricing from the inverted yield curve[364](index=364&type=chunk)[365](index=365&type=chunk) [Liquidity](index=122&type=section&id=Liquidity) - The Bank maintains sufficient liquidity through liquid assets (cash, cash equivalents, unencumbered investment securities) and borrowing capacity (FHLB, Federal Reserve, unsecured credit lines). Total liquid assets and available borrowing capacity increased to **$2.1 billion** as of March 31, 2025, from **$1.77 billion** at December 31, 2024[366](index=366&type=chunk)[367](index=367&type=chunk)[368](index=368&type=chunk) Liquid Assets and Borrowing Capacity (in thousands) | Liquid Assets and Borrowing Capacity (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | | Total liquid assets | $1,201,797 | $864,334 | | Total available borrowing capacity | $896,758 | $901,168 | | Total liquid assets and available borrowing capacity | $2,098,555 | $1,765,502 | - The loan-to-deposit ratio (excluding brokered deposits) was **100%** as of March 31, 2025, down from **111%** at December 31, 2024. Uninsured deposits totaled **$1.9 billion (36% of total deposits)**[369](index=369&type=chunk)[370](index=370&type=chunk) [Capital](index=124&type=section&id=Capital) - Total stockholders' equity increased from **$992 million** at December 31, 2024, to **$1.0 billion** at March 31, 2025, primarily due to net income, offset by cash dividends[372](index=372&type=chunk) - The Company and the Bank exceed all 'well-capitalized' regulatory requirements under Basel III, including Total Risk-Based Capital, Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Tier 1 Leverage ratios[376](index=376&type=chunk)[377](index=377&type=chunk)[378](index=378&type=chunk) Capital Ratios | Capital Ratios | March 31, 2025 Ratio | December 31, 2024 Ratio | | :----------------------------- | :------------------- | :-------------------- | | Total capital to risk-weighted assets (Republic Bancorp, Inc.) | 17.84% | 16.98% | | Common equity tier 1 capital to risk-weighted assets (Republic Bancorp, Inc.) | 16.58% | 15.73% | | Tier 1 (core) capital to risk-weighted assets (Republic Bancorp, Inc.) | 16.58% | 15.73% | | Tier 1 leverage capital to average assets (Republic Bancorp, Inc.) | 13.75% | 14.07% | - The deferral of CECL impact on regulatory capital (elected in 2020) resulted in regulatory capital ratios being approximately **0 basis points** lower at March 31, 2025, and **3 basis points** lower at December 31, 2024, if not for the deferral[381](index=381&type=chunk) [Asset/Liability Management and Market Risk](index=128&type=section&id=Asset%2FLiability%20Management%20and%20Market%20Risk) - Asset/liability management aims to ensure safety, liquidity, regulatory capital compliance, and acceptable net interest income. Interest rate risk is a significant concern, monitored through static and dynamic earnings simulation models[383](index=383&type=chunk)[385](index=385&type=chunk) Bank Interest Rate Sensitivity (% Change from base net interest income) | Bank Interest Rate Sensitivity (% Change from base net interest income) | -400 Basis Points | -300 Basis Points | -200 Basis Points | -100 Basis Points | +100 Basis Points | +200 Basis Points | +300 Basis Points | +400 Basis Points | | :------------------------------------------------------------------ | :---------------- | :---------------- | :---------------- | :---------------- | :---------------- | :---------------- | :---------------- | :---------------- | | As of March 31, 2025 | (2.3)% | (2.3)% | (5.5)% | (2.8)% | 3.0% | 6.1% | 8.9% | 12.0% | | As of December 31, 2024 | 3.4% | 4.4% | (0.2)% | 0.2% | 1.5% | 3.1% | 4.4% | 6.0% | - As of March 31, 2025, the Bank's earnings are more sensitive to fluctuations in short-term interest rates. Up-rate scenarios improved due to higher interest-earning cash balances, while down-rate scenarios deteriorated due to these same cash balances and lower deposit beta assumptions, partially offset by assumed increases in mortgage banking income[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk.](index=92&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' specifically the 'Asset/Liability Management and Market Risk' section. - Information required by this item is included under Part I, Item 2. 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' specifically the 'Asset/Liability Management and Market Risk' section[390](index=390&type=chunk) [Item 4. Controls and Procedures.](index=92&type=section&id=Item%204.%20Controls%20and%20Procedures.) As of March 31, 2025, Republic Bancorp, Inc.'s management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective. No material changes to internal control over financial reporting occurred during the quarter. - As of March 31, 2025, the Company's disclosure controls and procedures were evaluated and deemed effective by management, including the CEO and CFO[391](index=391&type=chunk) - No material changes in the Company's internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025[391](index=391&type=chunk) [PART II — OTHER INFORMATION](index=92&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits. [Item 1. Legal Proceedings.](index=92&type=section&id=Item%201.%20Legal%20Proceedings.) In the ordinary course of business, Republic Bancorp, Inc. and its subsidiary bank are involved in various legal proceedings. Management is not aware of any pending or threatened litigation that, if decided adversely, would result in a material adverse change to the Company's business or consolidated financial position. - Republic and the Bank are defendants in various legal proceedings in the ordinary course of operations[392](index=392&type=chunk) - Management is not aware of any pending or threatened litigation where an adverse decision could materially impact the Company's business or financial position[392](index=392&type=chunk) [Item 1A. Risk Factors.](index=92&type=section&id=Item%201A.%20Risk%20Factors.) This section highlights additional risk factors beyond those disclosed in the 2024 Form 10-K, specifically focusing on the operational risks associated with the planned conversion of the Company's core customer operating system in Q3 2025. Potential adverse impacts include technology disruptions, data loss, transaction errors, reputational damage, customer loss, regulatory scrutiny, and financial liability. - The Company plans to convert its core customer operating system during Q3 2025, which poses significant operational risks[394](index=394&type=chunk) - Potential adverse developments from the core system conversion include

```markdown [Balance Sheet Data](index=2&type=section&id=BALANCE%20SHEET%20DATA) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time [Balance Sheet Overview](index=2&type=section&id=Balance%20Sheet%20Overview) Republic Bancorp, Inc.'s balance sheet as of March 31, 2025, shows an increase in total assets and stockholders' equity compared to December 31, 2024, primarily driven by higher cash and cash equivalents and an increase in total deposits. Loans, net, experienced a slight decrease **Key Balance Sheet Data (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Total assets | $7,075,555 | $6,846,667 | $228,888 | 3.34% | | Total deposits | $5,405,892 | $5,210,546 | $195,346 | 3.75% | | Stockholders' equity | $1,034,089 | $992,029 | $42,060 | 4.24% | | Loans, net | $5,183,490 | $5,347,488 | $(163,998) | -3.07% | | Cash and cash equivalents | $793,020 | $432,151 | $360,869 | 83.50% | [Average Balance Sheet Data](index=3&type=section&id=AVERAGE%20BALANCE%20SHEET%20DATA) This section presents average balances for assets and liabilities over specific periods, offering insights into balance sheet structure and trends [Average Balance Sheet Trends](index=3&type=section&id=Average%20Balance%20Sheet%20Trends) For the three months ended March 31, 2025, average total assets increased compared to the previous quarter and year-ago period, primarily due to higher noninterest-earning cash and cash equivalents. Average interest-earning assets remained relatively stable year-over-year, while average interest-bearing liabilities saw a slight increase **Average Balance Sheet Data (in thousands):** | Metric | Three Months Ended Mar. 31, 2025 | Three Months Ended Dec. 31, 2024 | QoQ Change (%) | Three Months Ended Mar. 31, 2024 | YoY Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Total interest-earning assets | $6,634,278 | $6,491,473 | 2.19% | $6,641,448 | -0.11% | | Total interest-bearing liabilities | $4,671,529 | $4,434,078 | 5.36% | $4,643,647 | 0.60% | | Total assets | $7,335,756 | $6,900,626 | 6.30% | $7,219,572 | 1.61% | | Stockholders' equity | $1,022,844 | $997,435 | 2.55% | $933,042 | 9.62% | | Noninterest-earning cash and cash equivalents | $389,994 | $93,927 | 315.20% | $280,618 | 38.98% | [Total Company Average Balance Sheets and Interest Rates](index=4&type=section&id=TOTAL%20COMPANY%20AVERAGE%20BALANCE%20SHEETS%20AND%20INTEREST%20RATES) This section analyzes the company's net interest income, spread, and margin, detailing the impact of average balances and interest rates on profitability [Net Interest Income and Margin Analysis](index=4&type=section&id=Net%20Interest%20Income%20and%20Margin%20Analysis) The company reported an increase in net interest income and significant improvements in net interest spread and net interest margin for the three months ended March 31, 2025, compared to the same period last year. This was driven by a higher yield on interest-earning assets and a lower cost of interest-bearing liabilities **Net Interest Performance (Q1 2025 vs Q1 2024):** | Metric | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (bps) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------- | :--------------- | | Net interest income | $102,688 | $96,919 | $5,769 | - | | Net interest spread | 5.58% | 4.99% | - | 59 bps | | Net interest margin | 6.28% | 5.87% | - | 41 bps | | Yield on average interest-earning assets | 7.94% | 7.91% | - | 3 bps | | Cost of average interest-bearing liabilities | 2.36% | 2.92% | - | -56 bps | **Average Balances and Rates for Key Items (Q1 2025 vs Q1 2024, in thousands):** | Item | Q1 2025 Average Balance | Q1 2025 Rate | Q1 2024 Average Balance | Q1 2024 Rate | YoY Balance Change ($) | | :----------------------------------- | :---------------------- | :----------- | :---------------------- | :----------- | :--------------------- | | Federal funds sold and other interest-earning deposits | $516,785 | 4.45% | $454,426 | 5.57% | $62,359 | | Investment securities, including FHLB stock | $619,525 | 3.48% | $732,678 | 2.98% | $(113,153) | | Outstanding Warehouse lines of credit | $458,657 | 7.07% | $340,433 | 7.98% | $118,224 | | Money market accounts | $1,348,717 | 2.85% | $1,066,046 | 3.32% | $282,671 | | Brokered deposits | $247,319 | 4.57% | $421,096 | 5.39% | $(173,777) | | Federal Home Loan Bank advances and other long-term borrowings | $520,778 | 4.39% | $536,209 | 4.94% | $(15,431) | [Income Statement Data](index=5&type=section&id=INCOME%20STATEMENT%20DATA) This section outlines the company's financial performance over specific periods, highlighting key revenue, expense, and net income figures [Quarterly Income Statement Performance](index=5&type=section&id=Quarterly%20Income%20Statement%20Performance) The company experienced a substantial increase in net income for Q1 2025 compared to both the previous quarter and the prior year, primarily driven by higher net interest income and a significant increase in noninterest income, including a gain on the sale of Visa Class B-1 Shares. Provision for credit losses decreased year-over-year **Income Statement Highlights (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Net interest income | $102,688 | $75,394 | 36.21% | $96,919 | 5.95% | | Provision for expected credit loss expense | $17,672 | $12,951 | 36.46% | $30,622 | -42.29% | | Total noninterest income | $33,154 | $14,118 | 134.84% | $23,373 | 41.85% | | Total noninterest expense | $58,208 | $53,511 | 8.78% | $50,971 | 14.20% | | Income before income tax expense | $59,962 | $23,050 | 160.14% | $38,699 | 54.99% | | Net income | $47,268 | $19,016 | 148.57% | $30,606 | 54.47% | - Total noninterest income for Q1 2025 includes a **$4.090 million gain** on the sale of Visa Class B-1 Shares, which was not present in previous quarters. Core conversion & contract consulting fees of **$5.714 million** were recorded in Q1 2025, contributing to the increase in noninterest expense[10](index=10&type=chunk) [Selected Data and Ratios](index=6&type=section&id=SELECTED%20DATA%20AND%20RATIOS) This section presents key financial ratios and per-share data, providing insights into the company's profitability, efficiency, and shareholder value [Per Share Data and Performance Ratios](index=6&type=section&id=Per%20Share%20Data%20and%20Performance%20Ratios) The company demonstrated strong financial performance in Q1 2025 with significant improvements in profitability ratios such as Return on Average Assets and Return on Average Equity, and a notable decrease in the Efficiency Ratio. Earnings per share for Class A Common Stock increased substantially year-over-year **Per Share Data:** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Basic EPS - Class A Common Stock | $2.43 | $0.99 | 145.45% | $1.59 | 52.83% | | Diluted EPS - Class A Common Stock | $2.42 | $0.98 | 146.94% | $1.58 | 53.16% | | Book value per share | $52.98 | $51.01 | 3.86% | $48.20 | 9.92% | | Tangible book value per share | $50.46 | $48.47 | 4.10% | $45.63 | 10.58% | | Cash dividends declared per Class A Common share | $0.451 | $0.407 | 10.81% | $0.407 | 10.81% | **Performance Ratios:** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | :------------ | :--------------- | | Return on average assets | 2.61% | 1.10% | 151 bps | 1.70% | 91 bps | | Return on average equity | 18.74% | 7.63% | 1111 bps | 13.12% | 562 bps | | Efficiency ratio | 40.3% | 59.8% | -1950 bps | 42.3% | -200 bps | | Net interest margin - Total Company | 6.28% | 4.62% | 166 bps | 5.87% | 41 bps | | Net interest margin - Core Bank | 3.70% | 3.64% | 6 bps | 3.30% | 40 bps | | Cost of average deposits | 1.57% | 1.79% | -22 bps | 1.97% | -40 bps | [Loan Composition](index=7&type=section&id=LOAN%20COMPOSITION) This section details the breakdown of the company's loan portfolio by category, illustrating the distribution and changes in loan types [Loan Portfolio Breakdown](index=7&type=section&id=Loan%20Portfolio%20Breakdown) As of March 31, 2025, total loans decreased slightly quarter-over-quarter, with a notable decrease in Republic Processing Group (RPG) loans, particularly Tax Refund Solutions (TRS) Refund Advances, while Core Banking loans remained relatively stable **Loan Composition (in thousands):** | Loan Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Total Traditional Banking | $4,566,359 | $4,569,179 | $(2,820) | -0.06% | | Warehouse lines of credit | $569,502 | $550,760 | $18,742 | 3.40% | | **Total Core Banking** | **$5,135,861** | **$5,119,939** | **$15,922** | **0.31%** | | Tax Refund Solutions: Refund Advances | $30,344 | $138,614 | $(108,270) | -78.11% | | Total Republic Processing Group | $153,932 | $319,527 | $(165,595) | -51.82% | | **Total loans - Total Company** | **$5,289,793** | **$5,439,466** | **$(149,673)** | **-2.75%** | [Allowance for Credit Losses on Loans](index=7&type=section&id=ALLOWANCE%20FOR%20CREDIT%20LOSSES%20ON%20LOANS) This section analyzes the allowance for credit losses across different loan categories, reflecting the company's assessment of potential loan defaults [Allowance for Credit Losses Analysis](index=7&type=section&id=Allowance%20for%20Credit%20Losses%20Analysis) The total allowance for credit losses increased significantly quarter-over-quarter, primarily driven by a substantial rise in the allowance for Tax Refund Solutions within the Republic Processing Group, reflecting a higher allowance to total loans ratio for this segment **Allowance for Credit Losses (in thousands):** | Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Traditional Banking | $58,851 | $59,756 | $(905) | -1.51% | | Warehouse Lending | $1,421 | $1,374 | $47 | 3.42% | | **Total Core Banking** | **$60,272** | **$61,130** | **$(858)** | **-1.40%** | | Tax Refund Solutions | $25,981 | $9,861 | $16,120 | 163.47% | | Republic Credit Solutions | $20,050 | $20,987 | $(937) | -4.46% | | **Total Republic Processing Group** | **$46,031** | **$30,848** | **$15,183** | **49.22%** | | **Total Allowance - Total Company** | **$106,303** | **$91,978** | **$14,325** | **15.57%** | **Allowance to Total Loans Ratios:** | Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | | Traditional Banking | 1.29% | 1.31% | -2 bps | | Warehouse Lending | 0.25% | 0.25% | 0 bps | | Total Core Banking | 1.17% | 1.19% | -2 bps | | Tax Refund Solutions | 71.80% | 5.17% | 6663 bps | | Republic Credit Solutions | 17.03% | 16.30% | 73 bps | | Total Republic Processing Group | 29.90% | 9.65% | 2025 bps | | Total Company | 2.01% | 1.69% | 32 bps | [Credit Quality Data and Ratios](index=8&type=section&id=CREDIT%20QUALITY%20DATA%20AND%20RATIOS) This section provides key metrics and ratios related to the company's asset quality, including nonperforming assets, delinquent loans, and net charge-offs [Credit Quality Performance](index=8&type=section&id=Credit%20Quality%20Performance) The company's overall credit quality remained stable to improving in Q1 2025. Total nonperforming assets showed a slight increase QoQ but a decrease YoY, while total delinquent loans decreased QoQ. Net charge-offs for the total company remained relatively low, with Tax Refund Solutions showing net recoveries **Credit Quality Asset Balances (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Total nonperforming assets - Total Company | $23,957 | $23,920 | 0.15% | $22,860 | 4.80% | | Total delinquent loans - Total Company | $17,313 | $20,489 | -15.49% | $21,412 | -19.14% | | Total NCOs (recoveries) - Total Company | $3,347 | $3,136 | 6.73% | $4,050 | -17.36% | | Tax Refund Solutions NCOs (recoveries) | $(693) | $(2,159) | -67.99% | $(305) | 127.21% | **Credit Quality Ratios - Total Company:** | Ratio | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | :------------ | :--------------- | | Nonperforming loans to total loans | 0.43% | 0.42% | 1 bps | 0.41% | 2 bps | | Nonperforming assets to total assets | 0.34% | 0.35% | -1 bps | 0.33% | 1 bps | | Allowance for credit losses to total loans | 2.01% | 1.69% | 32 bps | 2.08% | -7 bps | | Allowance for credit losses to nonperforming loans | 465% | 404% | 6100 bps | 509% | -4400 bps | | Delinquent loans to total loans | 0.33% | 0.38% | -5 bps | 0.41% | -8 bps | | NCOs (recoveries) to average loans (annualized) | 0.24% | 0.24% | 0 bps | 0.30% | -6 bps | [Segment Data](index=9&type=section&id=SEGMENT%20DATA) This section presents financial information broken down by the company's distinct business segments, offering insights into their individual contributions to overall performance [Reportable Segments Overview](index=9&type=section&id=Reportable%20Segments%20Overview) Republic Bancorp, Inc. is structured into five reportable segments: Traditional Banking, Warehouse Lending (together forming "Core Bank"), Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS) (together forming "Republic Processing Group" or "RPG"). Each segment offers distinct products and services, with primary revenue drivers varying from net interest income to program fees and net refund transfer fees - The Company's five reportable segments are: - **Traditional Banking:** Provides traditional banking products to clients in its market footprint, primarily via banking centers and digital channels. Primary driver of net revenue is net interest income - **Warehouse Lending:** Provides short-term, revolving credit facilities to mortgage bankers across the United States. Primary driver of net revenue is net interest income - **Tax Refund Solutions (TRS):** Offers tax-related credit products and facilitates the receipt and payment of federal and state tax refunds. Primary drivers are net interest income and net refund transfer fees - **Republic Payment Solutions (RPS):** Offers general-purpose reloadable cards. Primary drivers are net interest income and program fees - **Republic Credit Solutions (RCS):** Offers consumer credit products, with a substantial portion of clients considered subprime or near-prime borrowers. Primary drivers are net interest income and program fees[15](index=15&type=chunk)[16](index=16&type=chunk) [Segment Financial Performance](index=10&type=section&id=Segment%20Financial%20Performance) For Q1 2025, Core Banking reported a net income of $17.361 million, while Republic Processing Group (RPG) reported a net income of $29.907 million, significantly higher than the prior year. TRS was a major contributor to RPG's net income, driven by net interest income and net refund transfer fees **Net Income by Segment (in thousands):** | Segment | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------- | | Traditional Banking | $15,712 | $12,283 | $3,429 | 27.91% | | Warehouse Lending | $1,649 | $839 | $810 | 96.54% | | **Total Core Banking** | **$17,361** | **$13,122** | **$4,239** | **32.31%** | | Tax Refund Solutions | $19,611 | $8,793 | $10,818 | 123.03% | | Republic Payment Solutions | $2,895 | $2,567 | $328 | 12.78% | | Republic Credit Solutions | $7,401 | $6,124 | $1,277 | 20.85% | | **Total RPG** | **$29,907** | **$17,484** | **$12,423** | **71.05%** | | **Total Company** | **$47,268** | **$30,606** | **$16,662** | **54.47%** | **Net Interest Income by Segment (in thousands):** | Segment | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------- | | Traditional Banking | $53,321 | $48,259 | $5,062 | 10.49% | | Warehouse Lending | $3,028 | $2,257 | $771 | 34.16% | | Tax Refund Solutions | $29,812 | $30,910 | $(1,098) | -3.55% | | Republic Payment Solutions | $3,994 | $3,508 | $486 | 13.86% | | Republic Credit Solutions | $12,533 | $11,985 | $548 | 4.57% | - Net refund transfer fees for Tax Refund Solutions increased by **28.40% YoY** to **$13.893 million** in Q1 2025 from **$10.820 million** in Q1 2024[17](index=17&type=chunk) [Footnotes](index=11&type=section&id=FOOTNOTES) This section provides supplementary details and definitions for various financial metrics and accounting treatments used throughout the report [Loan Fee Income Impact](index=11&type=section&id=Loan%20Fee%20Income%20Impact) Loan fee income significantly influences total interest income, loan yields, net interest margin, and net interest spread. For Q1 2025, total loan fees were $47.513 million, primarily driven by the Republic Processing Group, particularly Tax Refund Solutions **Total Loan Fees by Segment (in thousands):** | Segment | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :---------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Traditional Banking | $1,291 | $1,161 | 11.20% | $1,366 | -5.50% | | Warehouse Lending | $310 | $308 | 0.65% | $263 | 17.87% | | **Total Core Bank** | **$1,601** | **$1,469** | **8.98%** | **$1,629** | **-1.72%** | | TRS | $33,675 | $2,605 | 1192.71% | $35,871 | -6.12% | | RCS | $12,237 | $12,569 | -2.64% | $11,372 | 7.61% | | **Total RPG** | **$45,912** | **$15,174** | **202.57%** | **$47,243** | **-2.82%** | | **Total loan fees - Total Company** | **$47,513** | **$16,643** | **185.48%** | **$48,872** | **-2.78%** | [Provision for Expected Credit Loss Expense](index=11&type=section&id=Provision%20for%20Expected%20Credit%20Loss%20Expense) The provision for expected credit loss expense covers losses on both on-balance sheet loans and investment securities. Separately, provision expense for off-balance sheet credit exposures is categorized under "Other" noninterest expense - Provision for expected credit loss expense includes provisions for losses on on-balance sheet loans and investment securities. Provision expense for off-balance sheet credit exposures is a component of "Other" noninterest expense[19](index=19&type=chunk) [Mortgage and Consumer Loans Held for Sale](index=11&type=section&id=Mortgage%20and%20Consumer%20Loans%20Held%20for%20Sale) The Bank originates mortgage loans for sale primarily through its Traditional Banking segment and consumer loans for sale through the RCS segment. In Q1 2025, the Traditional Banking segment agreed to sell $5.0 million of consumer credit cards, transferring them from held for investment to held for sale **Mortgage Loans Held for Sale (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Originations | $41,233 | $27,046 | 52.46% | | Proceeds from sales | $(41,816) | $(18,773) | 122.74% | | Net gain on sale | $1,411 | $917 | 53.87% | | Balance, end of period | $9,140 | $80,884 | -88.73% | **Consumer Loans Held for Sale (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Originations | $266,651 | $188,347 | 41.58% | | Transferred from held for investment to held for sale | $4,977 | $0 | NA | | Proceeds from sales | $(266,633) | $(196,584) | 35.64% | | Net gain on sale | $3,055 | $3,405 | -10.28% | | Balance, end of period | $32,125 | $19,176 | 67.53% | [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) The company provides non-GAAP measures like tangible book value per share and adjusted efficiency ratio to offer additional insights into capital adequacy and operational efficiency. Tangible stockholders' equity excludes goodwill, mortgage servicing rights, and core deposit intangible. The adjusted efficiency ratio excludes nonrecurring items such as the gain on Visa Class B-1 shares, core system conversion fees, and merger expenses **Tangible Stockholders' Equity Reconciliation (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Total stockholders' equity - GAAP | $1,034,089 | $935,583 | 10.53% | | Less: Goodwill | $40,516 | $40,516 | 0.00% | | Less: Mortgage servicing rights | $6,875 | $7,102 | -3.19% | | Less: Core deposit intangible | $1,841 | $2,302 | -20.03% | | **Tangible stockholders' equity - Non-GAAP** | **$984,857** | **$885,663** | **11.20%** | | Tangible stockholders' equity to tangible assets - Non-GAAP | 14.02% | 12.98% | 104 bps | | Tangible book value per share - Non-GAAP | $50.46 | $45.63 | 10.58% | **Adjusted Efficiency Ratio Reconciliation (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | | Efficiency Ratio - GAAP-derived | 42.8% | 42.4% | 4 bps | | **Adjusted Efficiency Ratio - Non-GAAP** | **40.3%** | **42.3%** | **-200 bps** | | Adjustments to Total Net Revenue (Q1 2025): | | | | | Less: Gain on sale of Visa Class B-1 shares | $4,090 | $0 | NA | | Less: Insurance proceeds | $1,571 | $0 | NA | | Adjustments to Noninterest Expense (Q1 2025): | | | | | Less: Core conversion & contract consulting fees | $5,714 | $0 | NA | | Less: Expenses related to CBank acquisition (Q1 2024) | $0 | $41 | NA | [Other Definitions](index=12&type=section&id=Other%20Definitions) This section defines key terms and calculation methodologies used throughout the financial supplement, including the cost of average deposits, full-time-equivalent employees (FTEs), and the definition of delinquent loans for ratio calculations - **Cost of average deposits:** Equals annualized total interest expense on deposits divided by total average interest-bearing deposits plus total average noninterest-bearing deposits[24](index=24&type=chunk) - **FTEs:** Refers to Full-time-equivalent employees[25](index=25&type=chunk) - **Delinquent loans to total loans ratio:** Equals loans 30-days-or-more past due divided by total loans. For Refund Advances, a loan is considered delinquent if unpaid 35 days after the taxpayer's tax return was submitted to the applicable taxing authority[26](index=26&type=chunk) ```

Financial Overview - As of December 31, 2024, Republic Bancorp, Inc. had total assets of $6.8 billion, total deposits of $5.2 billion, and total stockholders' equity of $992 million[19]. - Republic Bancorp, Inc. ranks as the second largest Kentucky-based financial holding company based on total assets as of December 31, 2024[19]. - As of December 31, 2024, the Bank employed 989 full-time equivalent employees, with a focus on employee retention and well-being[78]. - The Company reported a Total Risk-Based Capital ratio of 16.98%, up from 16.10% in 2023[137]. - The Common Equity Tier 1 Risk-Based Capital ratio for Republic Bancorp, Inc. increased to 15.73% in 2024 from 14.85% in 2023[137]. - Republic Bank & Trust Company maintained a Tier 1 leverage capital ratio of 13.29% in 2024, compared to 13.25% in 2023[137]. - The Company and the Bank are categorized as well-capitalized under Basel III regulations, meeting all required capital ratios[136]. Banking Operations - The company operates 47 full-service banking centers, primarily located in Kentucky, with a significant presence in Metropolitan Louisville[18][21]. - The Traditional Banking segment now includes mortgage banking results, which were previously reported separately, reflecting a strategic reclassification[23]. - The bank's commercial lending activities focus on C&I lending and CRE lending, with targeted credit sizes typically between $1 million and $35 million[33][35]. - The bank is an SBA Preferred Lending Partner, allowing it to expedite the underwriting and approval of SBA loans, generally up to $3 million[41]. - The bank's CRE Division, launched in 2022, focuses on large CRE projects typically ranging from $5 million to $25 million[36]. - The bank's lending activities include construction loans for both residential and commercial properties, with a focus on established builders with solid financial records[42][44]. - The Bank's Private Banking division provides financial products and services tailored to high-net-worth individuals, leveraging the extensive experience of its Private Banking officers[50]. - The Core Bank provides short-term, revolving credit facilities to mortgage bankers, with individual advances expected to remain on the warehouse line for an average of 15 to 30 days[56]. Loan and Credit Products - In 2023, the bank sold $67 million of correspondent loans that were previously classified as held for investment, completing the sale in the second quarter of 2024[25]. - The Republic Credit Solutions (RCS) segment offers unsecured, small dollar consumer loans, with a significant portion of clients considered subprime or near-prime borrowers[74]. - The Bank offers RCS installment loans with terms ranging from 12 to 60 months, with all loan balances carried as "held for sale" on the balance sheet, intended to be sold within sixteen days of origination[81]. - The Bank originates healthcare-receivables products across the U.S., retaining 100% of receivables in some programs, while others are sold within one month of origination[81]. - The ERA loan product, introduced in December 2022, allows taxpayers to borrow funds as an advance of a portion of their tax refund, with a maximum advance amount of $6,500[60]. Regulatory Environment - The Company is subject to extensive federal and state banking laws and regulations, which primarily protect clients and depositors rather than stockholders[93]. - The Dodd-Frank Act and EGRRCPA provide certain exemptions for the Company and Bank, including limitations on interchange fees and regulatory capital requirements[101]. - The Company must obtain prior approval from the FRB for significant transactions, including mergers and acquisitions, which may affect its strategic planning[103]. - The Company and Bank must maintain well-capitalized and well-managed status to retain FHC status, which allows for a broader range of financial activities[107]. - The Bank is subject to federal laws designed to counter money laundering and terrorist financing, including the BSA and the Anti-Money Laundering Act of 2020[119]. - The Bank received an "Outstanding" CRA Performance Evaluation in March 2024, indicating strong compliance with community reinvestment obligations[124]. - The Bank's compliance with consumer protection laws is overseen by the CFPB, which regulates unfair, deceptive, or abusive acts in consumer financial services[122]. Market and Competitive Landscape - The Company faces intense competition from various financial institutions, including local and regional banks, credit unions, and fintech companies, impacting its ability to attract deposits and originate loans[84]. - The small-dollar consumer loan industry is highly competitive, with competitors including payday lenders and fintech companies, which may lead to challenges in retaining clients[91]. - The Bank emphasizes personalized service and local management philosophy to enhance its competitive edge in the market[85]. Financial Risks and Challenges - The Bank's earnings are significantly influenced by the difference between interest earned on loans and investments and interest paid on deposits[146]. - Fluctuations in interest rates could materially affect the Bank's profitability and net interest margin due to the sensitivity of its assets and liabilities[159]. - Approximately 37% of the Bank's total deposits as of December 31, 2024, were uninsured, which may expose the Bank to enhanced liquidity and earnings risks during financial distress[163]. - The Bank's reliance on large deposit relationships could increase funding costs if significant balances are withdrawn, potentially leading to higher overall operational costs[162]. - Mortgage interest rates remained elevated throughout 2024, leading to low mortgage refinance activity and continued low Warehouse demand, which may further decrease earnings in 2025[166]. - The Bank's ability to attract depositors may be limited during periods of market distress, impacting its net interest margin negatively[165]. - The Bank's credit risk associated with Refund Anticipation Loans (RAs) could materially impact financial condition if a significant portion of RAs cannot be collected[168]. - The Allowance for Credit Losses (ACLL) may be insufficient to cover actual loan losses, which could lead to increased provisions and negatively affect financial results[178]. - The Bank's operational risks are heightened by reliance on third-party data, and any failure in these systems could materially impact earnings[186]. - The Bank retains 100% of the balances it originates on certain credit products if it exits those product lines, increasing credit risk significantly[190]. - The Bank's revenue generation from mortgage loan sales is highly dependent on programs administered by Freddie Mac and Fannie Mae, which could materially affect its financial position if changes occur[191]. - Any significant reduction in the operation of Freddie Mac or Fannie Mae would likely prevent the Bank from originating and selling most of its mortgage loans, adversely impacting its business[192]. - A decrease in client deposits due to perceived superior returns from alternative investments could increase the Bank's funding costs and negatively impact its operations[193]. - Prepayment of loans by clients could reduce the Bank's interest income, adversely affecting its financial condition[194]. - The Company is exposed to credit risk from transactions with various financial institutions, which could materially affect its financial condition if defaults occur[195]. - The Company relies on key management personnel, and the loss of these individuals could adversely affect its growth and operational prospects[196]. - Regulatory compliance failures could lead to significant penalties and adversely affect the Bank's earnings, particularly concerning its RPG products[205]. - The Company is significantly impacted by regulatory policies that could negatively affect its liquidity position and earnings, influencing its cost of funds and net interest margin[210].

Financial Performance - Total interest income for Q4 2024 was $103,108,000, an increase from $90,785,000 in Q4 2023, representing a 13.5% year-over-year growth[9] - Net interest income for Q4 2024 reached $75,394,000, compared to $66,782,000 in Q4 2023, marking a 12.2% increase[9] - Net income for Q4 2024 was $19,016,000, compared to $19,659,000 in Q4 2023, a decrease of 3.3%[9] - Net interest income for the year ended December 31, 2024, was $312,154,000, an increase from $288,778,000 in 2023, representing an increase of 8.1%[19] - Net income for the year ended December 31, 2024, was $101,371,000, compared to $90,374,000 in 2023, reflecting a growth of 12.2%[19] Asset and Liability Management - Total assets increased to $6,846,667 thousand as of December 31, 2024, up from $6,692,470 thousand at September 30, 2024, representing a growth of 2.3%[4] - Total liabilities increased to $5,854,638 thousand from $5,712,765 thousand, representing a rise of 2.5%[4] - Total deposits reached $5,210,546 thousand, a 2.1% increase from $5,101,696 thousand in the prior quarter[4] - Total interest-bearing liabilities were $4,434,078,000 in Q4 2024, compared to $3,709,677,000 in Q4 2023, reflecting a 19.5% increase[9] Credit Quality and Allowance for Losses - The allowance for credit losses was $91,978 thousand, an increase from $82,158 thousand in the previous quarter, reflecting a rise of 12.2%[4] - The provision for credit losses in Q4 2024 was $12,951,000, significantly higher than $10,989,000 in Q4 2023, indicating increased risk management measures[9] - Total nonperforming loans increased to $22,760,000 as of December 31, 2024, compared to $20,618,000 as of December 31, 2023, reflecting a 10.4% increase[13] - The allowance for credit losses to total loans ratio improved to 1.69% as of December 31, 2024, compared to 1.57% a year earlier[13] Equity and Shareholder Value - Stockholders' equity increased to $992,029 thousand, compared to $979,705 thousand in the prior quarter, marking a growth of 1.3%[4] - Book value per share increased to $51.01 in Q4 2024 from $50.39 in Q3 2024, an increase of 1.3%[11] - Total stockholders' equity increased to $992,029 thousand as of December 31, 2024, up from $912,756 thousand a year earlier, representing a growth of 8.7%[26] - Tangible book value per share increased to $48.47 as of December 31, 2024, compared to $44.55 a year prior, marking a growth of 8.7%[26] Operational Efficiency - Total noninterest expense increased to $53,511,000 in Q4 2024 from $47,054,000 in Q4 2023, representing a 13.6% rise[9] - The efficiency ratio improved to 60% in Q4 2024 from 55% in Q3 2024, indicating a decrease in operational efficiency[11] - Adjusted noninterest expense for the year ended December 31, 2024, was $202,684 thousand, up from $197,238 thousand in the previous year, representing an increase of 2.3%[27] Interest Margin and Profitability - The net interest margin improved to 4.62% in Q4 2024, compared to 4.36% in Q4 2023, indicating better asset yield management[9] - The company maintained a strong capital position with a net interest margin of 3.64% in core banking for Q4 2024[18] - The net interest margin for the year ended December 31, 2024, was 4.85%, slightly down from 4.91% in 2023[19] Loan Growth and Activity - Loans net of allowance for credit losses rose to $5,347,488 thousand, compared to $5,214,759 thousand in the previous quarter, reflecting an increase of 2.6%[4] - Total loans increased to $5,439,466 in Q4 2024 from $5,296,917 in Q3 2024, reflecting a growth of 2.7%[12] - The company originated $1,231,782,000 in consumer loans for sale in 2024, compared to $756,714,000 in 2023, reflecting a substantial increase of 62.5%[23] Noninterest Income - Noninterest income for Q4 2024 was $14,118,000, down from $14,780,000 in Q4 2023, a decrease of 4.5%[9] - Total noninterest income for 2024 was $72,650,000, compared to $71,457,000 in 2023, showing an increase of 1.7%[19]

Company Structure and Operations - The Company dissolved its wholly owned insurance subsidiary, Republic Insurance Services, Inc., during the last quarter of 2023[238]. - The Bank operates through five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS, with Traditional Banking being the primary segment[252]. - The Traditional Banking segment includes 47 banking centers across various locations, primarily in Kentucky and Florida[254]. - The Bank's principal lending activities include retail mortgage lending, commercial lending, and consumer lending, with a focus on residential real estate loans[255][259][261]. - The Bank's Correspondent Lending channel began acquiring single-family, first-lien mortgage loans for investment in Q1 2023, primarily from Warehouse Lending clients[265]. - The Bank's acquisition strategy aims to selectively grow its franchise alongside organic growth strategies[268]. Financial Performance - Total Company net income for Q3 2024 was $26.5 million, an increase of $5.0 million compared to Q3 2023[291]. - Diluted EPS increased to $1.37 in Q3 2024 from $1.10 in Q3 2023[291]. - Traditional Banking segment net income rose by $3.5 million, or 31%, from Q3 2023 to Q3 2024[292]. - Net interest income in the Traditional Banking segment increased by $3.5 million, or 7%, from Q3 2023 to Q3 2024[292]. - Warehouse segment net income increased by $422,000, or 27%, from Q3 2023 to Q3 2024[294]. - Tax Refund Solutions segment net income increased by $501,000 from Q3 2023 to Q3 2024[296]. - Total Company net interest income was $71.3 million in Q3 2024, a $6.5 million, or 10%, increase from Q3 2023[306]. - Total Company net income for the first nine months of 2024 was $82.4 million, an increase of $11.6 million, or 16%, from the same period in 2023[357]. - Diluted EPS increased to $4.24 for the first nine months of 2024 compared to $3.60 for the same period in 2023[357]. Income and Expense Analysis - Noninterest income in the Traditional Banking segment increased by $1.1 million, or 11%, from Q3 2023 to Q3 2024[292]. - Noninterest income increased by $295,000, or approximately 41%, from Q3 2023 to Q3 2024[297]. - Total Company noninterest income increased by $2.5 million during the third quarter of 2024 compared to the same period in 2023, with Traditional Banking's noninterest income increasing by $1.1 million, or 11%[349]. - Total Company noninterest expense increased by $241,000 during the third quarter of 2024 compared to the same period in 2023[353]. - Traditional Banking's noninterest expense decreased by $234,000, or 1%, for the third quarter of 2024 compared to the same period in 2023[353]. - Total company noninterest expense decreased by $3.1 million, or 2%, during the first nine months of 2024 compared to the same period in 2023[427]. - Traditional Bank noninterest expense decreased by $5.0 million, with a notable reduction in merger-related expenses[429]. Credit Losses and Provisions - As of September 30, 2024, the Company maintained an Allowance for Credit Losses (ACLL) for expected credit losses inherent in its loan portfolio[247]. - The net charge for the total company provision was $5.7 million for Q3 2024, compared to $3.7 million for the same period in 2023, indicating a 54% increase[331]. - The Traditional Banking segment recorded a net charge of $1.5 million in Q3 2024, slightly down from $1.6 million in Q3 2023[332]. - The allowance for credit losses (ACLL) for Traditional Banking was 1.30% as of September 30, 2024, compared to 1.27% as of September 30, 2023[334]. - The ACLL for RCS as a percentage of total loans was 15.70% as of September 30, 2024, up from 13.82% as of December 31, 2023[342]. - The company's net charge-offs to average total loans increased from 0.11% during the third quarter of 2023 to 0.32% during the third quarter of 2024, with net charge-offs increasing by $2.8 million, or 209%[347]. - Total charge-offs for the company reached $49.6 million in the first nine months of 2024, compared to $36.3 million in the same period of 2023[419]. Asset and Liability Management - Total interest-earning assets increased to $6,312,419 thousand for the three months ended September 30, 2024, compared to $5,954,537 thousand for the same period in 2023, reflecting a growth of 6%[328]. - The average rate on total interest-earning assets increased to 6.40% for Q3 2024, up from 5.77% in Q3 2023[328]. - Total liabilities and stockholders' equity reached $6,711,818 thousand as of September 30, 2024, compared to $6,334,835 thousand in the previous year, marking a growth of 6%[328]. - Total interest-bearing liabilities increased to $4,388,790 thousand with an interest expense of $93,118 thousand for the nine months ended September 30, 2024[396]. - The company's net interest spread decreased to 4.03% for the nine months ended September 30, 2024, down from 4.33% in the same period of 2023[396]. Market and Economic Conditions - The Company anticipates potential impacts from inflation on operations and credit losses, which may affect future performance[240]. - The fair value of Mortgage Servicing Rights (MSRs) is influenced by market interest rates, with expected declines during periods of falling rates due to increased prepayment speeds[258]. - The increase in average interest-earning cash was driven by the inverted yield curve, making overnight cash a more appealing option[435]. - The company maintained supplemental on-balance sheet liquidity above required minimums in response to economic uncertainty during the first nine months of 2024[435].

Financial Performance - Net income for Q3 2024 was $26,543,000, up from $19,659,000 in Q3 2023, marking a significant increase of 35.1%[8] - Net interest income for Q3 2024 reached $71,305,000, compared to $64,825,000 in Q3 2023, reflecting a 10.5% increase[8] - Total interest income for Q3 2024 was $101,546,000, an increase from $90,785,000 in Q3 2023, representing a year-over-year growth of 11.4%[8] - Noninterest income totaled $16,813,000 in Q3 2024, down from $18,346,000 in Q3 2023, indicating a decrease of 8.3%[8] - Total noninterest expense for Q3 2024 was $48,609,000, slightly lower than $49,634,000 in Q3 2023, showing a decrease of 2.1%[8] - The company expects continued growth in net interest income and net income for the upcoming quarters, driven by strategic market expansions and new product offerings[19] Asset and Liability Management - Total assets as of September 30, 2024, increased to $6,692,470, up from $6,386,475 a year ago, representing a growth of 4.8%[3] - The total liabilities increased to $5,712,765 from $5,493,075 year-over-year, representing a growth of 4%[3] - Total deposits reached $5,101,696, a slight increase from $5,069,047 in the previous quarter, marking a growth of 0.3%[3] - Total interest-earning assets increased to $6,312,419, up from $5,954,537 in the same period last year, representing a growth of 6%[7] - Total interest-bearing liabilities rose to $4,281,727, compared to $3,508,458, representing an increase of 22%[7] Credit Quality - The allowance for credit losses on loans improved to $(82,158) from $(108,702) year-over-year, reflecting a decrease of 24.5%[3] - The allowance for credit losses increased to $81,567 from $73,438, reflecting a rise of approximately 11%[7] - Total nonperforming assets decreased to $20,757,000 from $21,806,000 in the previous quarter, representing a decline of 4.8%[13] - Nonperforming loans to total loans ratio improved to 0.37% from 0.39% in the previous quarter[13] - The allowance for credit losses to total loans ratio was 1.55%, slightly up from 1.53% in the previous quarter[13] Shareholder Metrics - Stockholders' equity rose to $979,705, up from $893,400 a year ago, showing an increase of 9.7%[3] - Book value per share rose to $50.39 from $49.19 in the previous quarter, reflecting a strong increase in shareholder equity[10] - Basic EPS for Class A Common Stock increased to $1.37 from $1.31 in the previous quarter, and $4.25 for the nine months ended September 30, 2024[10] - The efficiency ratio improved to 55% from 57% in the previous quarter, indicating better operational efficiency[10] - Tangible stockholders' equity increased to $930,065 thousand as of September 30, 2024, compared to $842,598 thousand a year earlier, marking a growth of 10.36%[25] Loan Portfolio - The company reported a net loan balance of $5,214,759, an increase from $5,006,523 a year ago, reflecting a growth of 4.1%[3] - Total loans for the company reached $5,296,917, an increase from $5,264,270 in the previous quarter, representing a growth of 0.62%[12] - Traditional banking loans amounted to $4,566,896, slightly down from $4,589,167, reflecting a decrease of 0.49%[12] - Warehouse lines of credit increased to $595,163, a growth of 8.67% from $549,011 in the previous quarter[12] - The total core banking loans reached $5,162,059, an increase from $5,138,178, representing a growth of 0.47%[12] Operational Highlights - The number of full-service banking centers remained stable at 47, maintaining the company's market presence[10] - The total number of full-time equivalent employees (FTEs) decreased to 992 from 999 in the previous quarter, indicating a slight reduction in workforce[10] - The Republic Processing Group (RPG) includes Tax Refund Solutions, Republic Payment Solutions, and Republic Credit Solutions, which collectively drive revenue through various financial products[15] - Traditional Banking segment focuses on providing loans, investments, and deposits primarily through banking centers and digital channels[16] - Warehouse Lending segment provides short-term credit facilities to mortgage bankers across the United States, contributing to revenue through mortgage warehouse lines of credit[16]

Company Structure and Operations - The Company dissolved its wholly owned insurance subsidiary, Republic Insurance Services, Inc., during Q4 2023[202]. - As of June 30, 2024, the Company operates 47 banking centers primarily in Kentucky, with a focus on traditional banking products[214]. - The Bank's retail mortgage lending includes single-family residential real estate loans and HELOCs, with collateral predominantly located in its market footprint[214]. - The Bank's commercial lending activities are conducted through various channels, including Corporate Banking and Retail Banking, primarily serving clients within its market footprint[220]. - The Company has an acquisition strategy to selectively grow its franchise alongside organic growth strategies[224]. - The Bank's mortgage banking activities involve originating and selling fixed-term residential real estate loans into the secondary market, primarily to FHLMC and FNMA[215]. - The Bank's consumer lending includes home improvement loans and credit cards, although not actively promoted in its markets[221]. - The Bank's Treasury Management Services offer various deposit products and cash management solutions to commercial clients[222]. - The Bank began acquiring single-family, first-lien mortgage loans through its Correspondent Lending channel in Q1 2023, purchasing loans primarily at a premium[223]. - The Bank's Internet and Mobile Banking services enhance market penetration and client account management capabilities[224]. Financial Performance - Total Company net income for Q2 2024 was $25.2 million, an increase of $4.2 million or 20% compared to Q2 2023[243]. - Diluted EPS increased to $1.30 for Q2 2024, up from $1.07 in Q2 2023, reflecting a growth of 21.5%[243]. - Traditional Banking segment net income rose by $2.6 million, or 24%, from Q2 2023 to Q2 2024[244]. - Warehouse Lending segment net income increased by $262,000, or 23%, from Q2 2023 to Q2 2024[247]. - Tax Refund Solutions segment net income grew by $909,000, or 42%, from Q2 2023 to Q2 2024[248]. - Total Company net interest income was $68.5 million during Q2 2024, an increase of $4.0 million, or 6%, from Q2 2023[256]. - Total Company net income for the first six months of 2024 was $55.8 million, a $6.7 million, or 14%, increase from the same period in 2023[298]. - Diluted EPS increased to $2.87 for the first six months of 2024, up from $2.50 for the same period in 2023[298]. Income and Expense Analysis - Noninterest income in the Traditional Banking segment decreased by $1.2 million, or 11%, from Q2 2023 to Q2 2024[244]. - Noninterest income in the Tax Refund Solutions segment decreased by $720,000, or 16%, from Q2 2023 to Q2 2024[248]. - Noninterest expense in the Tax Refund Solutions segment was $2.0 million for Q2 2024, down from $2.2 million in Q2 2023[248]. - Republic Payment Solutions segment net income decreased by $759,000, and net interest income decreased by $1.0 million from Q2 2023 to Q2 2024[249]. - Republic Credit Solutions segment net income increased by $1.1 million, or 29%, and net interest income increased by $2.8 million, or 31%, from Q2 2023 to Q2 2024[250]. - Total Company noninterest income decreased by $613,000 during the first six months of 2024 compared to the same period in 2023, with Traditional Banking's noninterest income decreasing by $1.4 million, or 7%[353]. - Noninterest expense at the RCS segment increased by $1.0 million, or 36%, in Q2 2024, primarily due to higher servicing costs and marketing expenses[298]. Loan and Credit Quality - The net charge to the Provision for the second quarter of 2024 was $5.1 million, a decrease from $6.1 million in the same period of 2023, indicating improved credit quality[276]. - The Traditional Banking segment recorded a net charge of $915,000 in the second quarter of 2024, compared to a net credit of $1.9 million in the same period of 2023, driven by changes in loan mix[276]. - The Allowance for Credit Losses (ACLL) for Traditional Banking was 1.30% as of June 30, 2024, slightly up from 1.26% as of June 30, 2023, indicating stable asset quality[278]. - Total Company net charge-offs increased from 2.37% in Q2 2023 to 2.52% in Q2 2024, with net charge-offs rising by $4.5 million, or 16%[288]. - The incurred loss rate for RAs as of June 30, 2024, was 3.72% of the $874 million total loans originated during the first quarter 2024 tax filing season[282]. - RCS recorded a net charge to the Provision of $5.2 million in Q2 2024, compared to $4.3 million in Q2 2023, representing a 21% increase[283]. - The ACLL for RCS was 15.44% as of June 30, 2024, up from 12.88% as of June 30, 2023[284]. - The total balance of classified and special mention loans decreased by approximately $1.2 million during the first half of 2024[380]. - The total balance of nonperforming loans remained stable at 0.39% of total loans for both June 30, 2024, and December 31, 2023[383]. Deposits and Funding - Total Traditional Bank deposits increased by $202 million to $4.6 billion as of June 30, 2024[299]. - The weighted-average cost of total interest-bearing deposits increased from 1.17% in the first six months of 2023 to 2.74% in the first six months of 2024, with average interest-bearing deposits rising by $705 million[320]. - Core Bank deposits increased by $203 million, or 5%, from December 31, 2023, totaling $4,397,007 thousand as of June 30, 2024[395]. - Interest-bearing deposits in the Core Bank rose by $273 million, driven by a $133 million increase in money market accounts and a $75 million increase in transaction deposits[396]. - Noninterest-bearing deposits decreased by $70 million, continuing a downward trend due to rising market interest rates[397]. - The Company expects slower overall growth and a potential continuing decline in noninterest-bearing deposits in the foreseeable future[398]. Market and Economic Conditions - Management anticipates potential net interest margin compression in the second half of 2024 due to shifts in deposit types and rising borrowing costs[321]. - The company believes its reserves are adequate to absorb expected losses on all nonperforming loans as of June 30, 2024[388]. - The increase in Core Bank deposits was primarily driven by higher interest rates making interest-bearing accounts more attractive to clients[397].

Financial Performance - Total assets as of June 30, 2024, were $6,616,574, an increase of $21,683 from December 31, 2023, and an increase of $246,795 from June 30, 2023[3]. - Total assets increased to $6,706,884,000 in Q2 2024, compared to $6,157,425,000 in Q2 2023, marking a growth of 8.9%[10]. - Net income for Q2 2024 was $25,206,000, an increase of 19.4% from $21,052,000 in Q2 2023[10]. - Net income for the first half of 2024 was $55,812,000, up from $49,144,000 in the first half of 2023, reflecting an increase of approximately 13.6%[21]. - Total noninterest income for Q2 2024 totaled $18,346,000, a decrease from $19,651,000 in Q2 2023[10]. - Total noninterest expense for Q2 2024 was $49,634,000, down from $51,533,000 in Q2 2023, reflecting a decrease of 3.7%[10]. - The efficiency ratio for the second quarter of 2024 was reported at 57%, compared to 42% in the previous quarter, indicating a significant increase in operational efficiency[28]. Loans and Credit Quality - Loans increased to $5,264,270 as of June 30, 2024, up by $24,409 from March 31, 2024, and up by $211,128 from June 30, 2023[3]. - The average balance of loans, including loans held for sale, was $5,262,719 for the three months ended June 30, 2024, a decrease of $191,625 from the previous quarter[4]. - The allowance for credit losses on loans was $80,687 as of June 30, 2024, a decrease of $1,443 from December 31, 2023, and an increase of $8,485 from June 30, 2023[3]. - Total nonperforming loans increased to $20,541, up from $17,504 a year ago, representing a 17.3% increase[14]. - Delinquent loans in the Core Bank segment rose to $9,313, a 59.5% increase from $5,875 a year ago[14]. - The allowance for credit losses to total loans ratio decreased to 1.53% from 2.08% in the previous quarter, indicating improved credit quality[14]. Stockholders' Equity and Book Value - Stockholders' equity increased to $955,423 as of June 30, 2024, up by $42,667 from March 31, 2024, and up by $68,452 from June 30, 2023[3]. - Book value per share increased to $49.19, up $3.95 or 8.8% compared to $45.24 a year ago[12]. - Total stockholders' equity under GAAP increased to $955.423 million as of June 30, 2024, compared to $886.971 million a year earlier[27]. - Tangible stockholders' equity was reported at $905.690 million, reflecting a year-over-year increase from $835.747 million[27]. Interest Income and Margin - Total interest income for Q2 2024 was $97,700,000, an increase of 23.4% compared to $79,054,000 in Q2 2023[10]. - Net interest income for Q2 2024 reached $68,536,000, up from $64,529,000 in Q2 2023, reflecting a growth of 6.2%[10]. - The net interest margin for Q2 2024 was 4.36%, slightly down from 4.46% in Q2 2023[10]. - The yield on average interest-earning assets decreased to 6.21% from 7.91% in the previous quarter, a decline of 21.5%[12]. Operational Metrics - The number of full-time employees (FTEs) decreased to 999 from 1,011 in the previous quarter, a reduction of 1.2%[12]. - The company maintains a diversified operational structure with five reportable segments, enhancing its market reach and revenue generation capabilities[16]. - The Core Banking operations, which include Traditional Banking and Warehouse Lending, are critical for the company's overall performance and stability[17]. - The company continues to focus on improving credit quality metrics while expanding its product offerings in the consumer credit space[17].